Rapidly Growing Electric Vehicle Market... Related Industries Also Stirred

[Asia Economy Reporter Park So-yeon] As the electric vehicle (EV) market is expected to explode in growth, related upstream and downstream industries are also stirring. Among them, the growth of the EV battery and materials-related industries stands out. The European Union (EU) has finalized the 'Green Deal' policy to reduce carbon emissions to zero by 2050, and since carbon emission regulations began in 2021, European automakers are expected to increase the sales ratio of electric vehicles, accelerating the growth of related industries such as EV batteries.

◇The EV battery materials market is expanding= Recently, POSCO Chemical signed a large-scale cathode material supply contract with LG Chem, marking a full-scale entry into the EV battery materials market.

POSCO Chemical signed a cathode material supply contract worth 1.8533 trillion KRW with LG Chem. The contract period is from 2020 to 2022. Cathode materials are key components that determine the capacity and output of batteries.

POSCO Chemical plans to supply high-nickel NCM (Nickel-Cobalt-Manganese) cathode materials, which have a high nickel content and are mainly used in EV batteries, to LG Chem.

Through this contract, POSCO Chemical will increase its market share in the high-nickel cathode material market, strengthening its position in this business, while LG Chem will secure key battery materials more stably.

POSCO Chemical is also focusing on securing a stable mass production system for cathode materials.

Currently, it is gradually constructing an EV battery cathode material production plant with an annual production capacity of 90,000 tons on a 165,203㎡ site, equivalent to 20 soccer fields, in the Gwangyang Yulchon Industrial Complex.

POSCO Chemical plans to make this plant a smart factory with automated production and quality control processes and an integrated control system to maximize manufacturing and quality competitiveness.

A POSCO Chemical official said, "This large-scale supply contract has solidified the achievements in the energy materials business promoted at the POSCO Group level and secured future growth engines. We will continue to invest in research and development and production capacity expansion and expand partnerships with domestic and overseas battery manufacturers to leap to a global top-tier position."

◇Domestic and foreign conglomerates investing in EV batteries= Recently, U.S. General Motors (GM) purchased a 640,000㎡ site in Ohio, where the joint venture with LG Chem for EV batteries will be established.

GM announced that it signed a contract to purchase a 158-acre (639,000㎡) site in Lordstown, Ohio.

This site is near GM's existing assembly plant complex. GM plans to start construction by this spring after obtaining permits and completing procedures.

Previously, on December 5 last year, LG Chem and GM signed a contract to establish a joint venture for EV battery cells with a 50:50 equity ratio, each investing 1 trillion KRW initially and gradually investing up to 2.7 trillion KRW to achieve a production capacity of over 30 GWh.

GM plans to build the joint venture with LG Chem near the Lordstown assembly plant, which is scheduled to be closed, and employ some of the existing workforce.

Since starting operations at its Holland plant in Michigan in 2012, LG Chem has continuously expanded and currently has about 5 GWh of production capacity.

With the establishment of the joint venture in Ohio, LG Chem now has two production bases in the U.S. Including this, it has a total of seven bases worldwide: five self-operated plants and two joint venture plants in the three major EV markets of China, Europe, and the U.S.

SK Innovation will also begin mass production of EV batteries capable of driving 500 km on a single charge from 2022 at its U.S. plant. After producing prototypes by mid-next year and conducting performance tests, full-scale production will commence. This is through the battery plant SK Innovation is building as a global production base in Georgia, U.S.

The road distance from Seoul to Busan is about 456 km, approximately 325 km in a straight line. With SK's EV batteries installed, this distance can be covered without the need for additional charging.