[Emergency, K-Battery] 11 out of 13 production facilities under construction in the US are 'K-Battery'

Domestic Companies' US Production Facilities Share
Plan to Expand to 70% by 2025
Large-Scale Investment in European Market Since 2017
Last Year, Top 3 Companies' Sales Share at 71.4%

Strong Technology of Mid-Sized and Small-Medium Materials and Components Firms
Collaboration with Hyundai and Kia Motors in Electric Vehicles Maturing
Establishing a Triangular Battery Ecosystem

[Asia Economy Reporter Donghoon Jeong] The global electric vehicle (EV) market boom is propelling the domestic battery industry to accelerate its growth. When key government officials and global entrepreneurs visit Korea despite the spread of COVID-19, they make it a point to visit Korean battery factories. This reflects the repeated global courting of the ‘K-Battery,’ which is advancing technological sophistication alongside aggressive investments. As electric vehicles and autonomous driving become the ‘black hole’ swallowing industrial trends, interest in the battery industry?an essential component of EVs?and especially Korean battery companies, is just beginning. Their influence is expanding beyond the domestic market to major countries such as the United States and Europe, as well as to China, home to the global No. 1 company CATL.

◆‘K-Battery’ aiming for world No. 1= According to the Ministry of Trade, Industry and Energy and industry sources on the 14th, the U.S. Department of Energy (DOE) announced at the end of last year that among the 13 large-scale battery production facilities planned for construction in the U.S. by 2025, 11 are related to the three domestic companies: LG Energy Solution, SK On, and Samsung SDI.

Currently, the battery facilities of Korean companies operating in the U.S. account for about 10.3% of the total U.S. production capacity. If the ‘alliance and cooperation’ between U.S. automakers and Korean battery companies proceeds smoothly, their share is expected to expand to around 70% by 2025.

The market share in Europe is also overwhelming. Korean companies have made proactive investments since 2017, recognizing the potential of the European EV market. According to the Korea Battery Industry Association, Korean companies account for 64.2% of battery production facilities within the European Union (EU), and the sales market share of the three domestic battery companies in the EU reached about 71.4% by last year. Domestic companies plan to double their production capacity by 2025 (from 99.7 to 204.1 GWh). Considering current market shares and investment plans, Korean companies are expected to continue their strong performance in the EU and U.S. markets through 2025.

Aggressive investments are yielding results. Last year, Samsung SDI recorded its first annual profit since entering the battery business 12 years ago. LG Energy Solution, which recently completed its initial public offering (IPO), posted an operating profit of 783.6 billion KRW last year despite losses exceeding 1 trillion KRW due to the GM Bolt EV recall and energy storage system (ESS) replacements. SK On, the battery subsidiary of SK Innovation, is also expected to achieve over 100% sales growth this year and is likely to return to profitability. These achievements are the result of steady investments by the three K-Battery companies over the past decade. There is great expectation that batteries will become a ‘100-year growth engine,’ similar to the semiconductor industry, which has been a major pillar of the Korean economy for the past 30 years.

◆‘Ecosystem building’ is the key to success= The reason the battery industry can become the ‘second semiconductor’ is that it is building a ‘battery ecosystem.’ Small and medium-sized enterprises in the ‘SoBuJang’ (materials, parts, and equipment) sector possess the technological capabilities to compete in the global market, and cooperation with global automakers, led by Hyundai and Kia, is maturing.

‘BlueOvalSK,’ a joint venture between SK Innovation and Ford, is investing a total of 6 trillion KRW to produce 60 GWh of EV batteries annually at a local joint factory in the U.S. starting around 2025. This capacity can supply approximately 600,000 electric pickup trucks.

LG Energy Solution established the joint venture Ultium Cells with General Motors (GM), the No. 1 automaker in the U.S., in December 2019, and is constructing joint factories with a capacity of 35 GWh each in Ohio and Tennessee. The top two U.S. automakers have both partnered with Korean battery companies. Samsung SDI is collaborating with U.S. automaker Stellantis to establish a 23 GWh battery factory in the U.S. by 2025.

Battery material companies are also growing into global players alongside battery companies. Compared to 2017, the sales of the four major battery material companies (cathode, anode, electrolyte, separator) increased 2 to 8 times by 2020. Six domestic material companies have entered the global top 10.

Juno Song, PD of Secondary Batteries at the Strategic Planning Group of the Korea Evaluation Institute of Industrial Technology, said, “Battery material companies and automakers must all cooperate to expand the battery ecosystem,” adding, “The Biden administration’s efforts to counter China will be an important opportunity for securing the value chain of the domestic battery industry.”