LG and SK Ignite 'Battery Rise' in the US

US Electric Vehicle Market to Grow 29% by 2025
Battery Market Expected to Expand 7-Fold to 224,538 MWh
LG Energy Solution and SK Innovation Accelerate Expansion Through Joint Ventures with US Automakers

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Hwang Yoon-joo] LG Energy Solution and SK Innovation are aggressively investing in batteries in the United States. In particular, SK Innovation has more than doubled its planned investment scale in the U.S., making a strong presence in the electric vehicle market. The shift of Korean companies, which had focused battery investments mainly in Europe, to the U.S. is thanks to the Biden administration's eco-friendly policies combined with massive electric vehicle investments by American automakers.

According to industry sources on the 17th, SK Innovation's battery production capacity in the U.S. is expected to expand to 150.5 GWh as early as 2026. By region, the Georgia Plant 1 will have 9.8 GWh, Georgia Plant 2 11.7 GWh, Tennessee 43 GWh, and Kentucky 86 GWh. The Tennessee and Kentucky plants are being constructed by the battery joint venture 'BlueOvalSK' established with Ford.

LG Energy Solution will have a production capacity of 145 GWh by 2025. It is establishing plants in Michigan with 5 GWh, Ohio with 35 GWh, and Tennessee with 35 GWh. The Ohio and Tennessee plants are investments made by the joint venture 'Ultium Cells' with General Motors (GM).

Korean battery companies are enthusiastic about investing in the U.S. due to the rosy outlook of the American electric vehicle market and the Biden administration's eco-friendly policies. The competition in electric vehicle sales, once led by Tesla, now includes the U.S. Big Three automakers?GM, Ford, and Stellantis?resulting in an increase in electric vehicle models such as passenger cars and pickup trucks.

According to market research firm IHS Markit, the U.S. electric vehicle market is expected to grow from about 13 million units last year to 16.8 million units by 2025, a 29% increase. Accordingly, the electric vehicle battery market size is also expected to surge. In the U.S. alone, the electric vehicle battery market is estimated to expand sevenfold from 32,061 MWh last year to 224,538 MWh by 2025.

Additionally, electric vehicle support policies have contributed to U.S. investments. Earlier this month, the U.S. House of Representatives passed a bill proposed by Democratic lawmakers to expand electric vehicle tax credits. The tax credit amount will increase from the current $7,500 (approximately 8.81 million KRW) to $12,500 (approximately 14.7 million KRW). This bill primarily benefits American automakers (GM, Ford, Stellantis, etc.) affiliated with the United Auto Workers (UAW). Furthermore, battery manufacturers producing in the U.S. are also expected to benefit. This is why Korean battery companies are intensifying their investments in the U.S. in partnership with American automakers.

LG Energy Solution and SK Innovation aim to leverage the U.S. market as a stepping stone to become the world's number one battery companies. Considering that the Chinese market favors domestic electric vehicle and battery companies, the global market share will be determined in the U.S. market.

Kim Hyun-tae, a researcher at BNK Investment & Securities, explained, "The production capacity of BlueOvalSK has been confirmed at a total of 129 GWh, twice as large as initially expected," adding, "Battery mid- to long-term capacity and sales guidance will soon be revised upward, and expectations for the battery subsidiary 'SK ON' will also increase."