Second Place at Risk... Chinese Battery Close on Heels (Comprehensive)

2nd Place Korea, 3rd Place China Gap at All-Time Low

[Asia Economy Reporter Choi Seoyoon] Korean battery companies are facing fierce challenges from China. The market share gap between the 2nd-ranked Korean and 3rd-ranked Chinese companies has narrowed to an all-time low.

SNE Research announced on the 7th that, based on global electric vehicle battery market share (by usage) from January to October this year, LG Energy Solution, ranked 2nd, recorded 13.8%, while China's BYD, ranked 3rd, recorded 13.2%. Until 2020, the market share gap between Korea and China was over 16 percentage points.

Looking at growth trends, the situation for the Korean battery industry is even more bleak. While LG Energy Solution grew 16.1%, SK On 83.2%, and Samsung SDI 69% over the past year, China showed growth rates of up to 300%. Among the top 10 Chinese companies, CATL grew 98.6%, BYD 171.4%, CALB 172.7%, Guoxuan 142%, and Sunwoda 345.2%, growing at a frightening pace. Many believe it is only a matter of time before LG Energy Solution is overtaken by BYD. Before its spin-off, LG Chem’s electric vehicle batteries held the world’s number one position from March 2020 but lost it to CATL in September of the same year.

China is encroaching on the battery market by leveraging vertical integration, material supply chains, and extensive government support. BYD, China’s largest electric vehicle company with vertical integration, sold 1.4 million electric vehicles from January to October this year, surpassing Tesla to secure the number one spot in the domestic market. They can secure resources cheaply and easily. The dependency of secondary battery parts produced by domestic battery companies on China reaches 85.3% for anode materials, 72.5% for cathode materials, and 54.8% for separators.

The pace of building material supply chains is also steep. Guoxuan, ranked 8th, announced plans to invest about 4 trillion KRW to establish battery material factories in the United States and Vietnam. In particular, the U.S. investment is a move to respond to the Inflation Reduction Act (IRA), expected to receive about 250 billion KRW in investment incentives and additional tax benefits.

April 19 last year, the BYD booth at the Shanghai Auto Show in China.
[Image source=Reuters Yonhap News]

Fundraising through initial public offerings (IPOs) is also active. CALB, ranked 7th globally and one of China’s top three power battery companies, raised about 2 trillion KRW by listing on the Hong Kong stock exchange last October. CALB also declared in October that it aims to reach the world’s 3rd place within five years. SVOLT, which has filed the most patents for solid-state battery technology, is listed on the STAR Market, known as the ‘Chinese Nasdaq.’ Its corporate value is around 11 trillion KRW.

Massive government support continues. Starting with the 2009 policy ‘Interim Measures for Financial Subsidies to Promote New Energy Vehicle Purchases’ in 13 provinces including Beijing, China established policies such as the ‘Automobile Power Battery Industry Development Action Plan’ and the ‘New Energy Vehicle Industry Development Plan (2021?2030)’ to encourage next-generation technology development and promote secondary battery supply chains including lithium and nickel.

Experts agree that support at the level of major overseas countries is necessary to secure supply chains and respond to technological competition. Professor Park Cheolwan of Seojeong University said, “As the electric vehicle battery industry, once centered on Korea, China, and Japan, now attracts interest from the U.S. and Europe, the market is expanding rapidly, but China is monopolizing the benefits of this favorable market environment. Without proactive investments in supply chains, workforce, and technology to build a battery industry ecosystem, Korea risks losing its leadership.”