[Click eStock] Implications of Volkswagen-Yumikore Joint Venture... South Korea's Anode Material Market Share Up, 'Increasing Weight'

[Asia Economy Reporter Lee Seon-ae] An investment opinion has emerged that the implication derived from the data points mentioned during Volkswagen's announcement of the joint venture (JV) establishment with cathode material company Umicore is the expansion of market share by Korean cathode material companies.

According to Hana Financial Investment on the 10th, Volkswagen announced that the goal of the JV with Umicore is to supply cathode materials to Volkswagen's European battery factory, which will start operating at a scale of 20GWh from 2025 and reach up to 160GWh by 2030. Although this is a considerable scale, it is significantly lower compared to the targets of 80GWh in 2025 and 240GWh in 2030 presented at the Power Day event in March 2021.

While there was no explicit statement about lowering the existing targets, the fact that the internal production capacity goals for 5 and 10 years later have decreased by 75% and 33%, respectively, indicates that the internalization process is progressing more slowly than expected. Volkswagen's 탈-Korea (reducing dependence on Korean battery companies, which currently stands at 70%)?including startups like Northvolt (Sweden), latecomers in the battery market like Gotion-tech (China), and Volkswagen's own battery production plant establishment efforts?is realistically judged to be difficult.

At Power Day, Volkswagen announced that future electric vehicle entry models would mainly use LFP batteries, while volume models would primarily use ternary batteries. Kim Hyun-soo, a researcher at Hana Financial Investment, stated, "In this situation, the establishment of a joint venture with Umicore, a ternary cathode material company, to procure cathode materials for in-house battery production can be interpreted as Volkswagen pushing forward a roadmap focused on in-house production of ternary batteries." He added, "Volkswagen also seems to consider ternary cathode materials as the mainstream in the cathode material market."

Umicore has revised down not only its short-term performance but also its performance guidance for 2022 and 2023 (the second downward revision in the past four months). The short-term performance guidance downgrade is likely due to semiconductor supply shortages, but considering OEMs' outlook that the shortage of automotive semiconductors will be resolved from the second half of 2022, the 2023 guidance downgrade is judged to be due to a decline in market share in the high-nickel cathode material market. Umicore had presented a mid-to-long-term target of 170,000 tons for 2023 in 2019 (expressed as a volume corresponding to 100GWh CAPA in 2023, convertible to about 160,000 to 180,000 tons), but has not provided mid-to-long-term guidance for the past two and a half years. Researcher Kim emphasized, "Considering that domestic companies have presented mid-to-long-term cathode material production capacity guidance such as POSCO Chemical's 225,000 tons in 2023 and 400,000 tons in 2026, and EcoPro BM's 170,000 tons in 2023 and 480,000 tons in 2026, and that these figures have been sharply revised upward over the past year, it is judged that Korean companies are in the process of increasing their market share in the current cathode material market."