[Battery, Questioning the Crisis] Overheated Competition with China "No Drastic Measures in Sight"

②After the Investment Frenzy, K-Battery
China Leads in Scale and Technology
Secured Overseas Markets but...
Large-Scale Expansion Could Be a Burden

Editor's NoteCan Korea's battery industry truly become the next advanced industry growth engine? Looking at the stock market, which thrives on future value, the recent atmosphere surrounding the battery industry has changed. Ecopro, crowned as the 'emperor stock,' is now threatened at the 1 million KRW mark. As the stock prices of major battery companies have taken a downturn, a 'crisis theory' has emerged. The global recession and weaker electric vehicle sales have had a significant impact. We revisited the crisis facing our battery industry, standing at the crossroads of growth and stagnation, from three perspectives: supply chain, price competition, and labor shortages.

LG Energy Solution has lost its position as the 'No. 2' battery supplier. From January to July this year, LG Energy Solution's battery shipments totaled 51.4 GWh. In contrast, China's BYD recorded 58.1 GWh, solidifying its undisputed second place. The top spot in battery shipments (132.9 GWh) belongs to China's CATL. Samsung SDI, which was ranked 6th last year with 15.0 GWh, was pushed down one rank by China's CALB (16.4 GWh). CALB, which has been explosively growing this year, is on track to soon surpass SK On (19.0 GWh) as well.

The competition between Korean and Chinese battery companies is intensifying over time. Although Chinese battery companies, backed by government support and dominating their domestic market, were once regarded as 'frogs in a well' due to lagging technology, they have completely transformed.

[Image source=Reuters Yonhap News]

Chinese companies, which have rapidly grown based on solid supply chains, are rivals and the biggest threats to Korean battery companies. Experts point out that while 'K-battery' companies have gained an advantage by securing early positions in the U.S. and European markets, a long-term growth vision is not clearly visible.

The greatest strength of Chinese battery companies lies in economies of scale. Last year, 6.58 million electric vehicles were sold in China, overwhelmingly surpassing the U.S. (980,000 units) and Europe (2.64 million units). Although the Chinese government abolished subsidies this year, electric vehicle sales exceeded last year's figures. The electric vehicle penetration rate rose from 21.3% last year to 27.7% this year. This solid demand base has translated into corporate growth. CATL's revenue last year was 328.6 billion yuan (approximately 62.4 trillion KRW), a 152% surge compared to the previous year.

Now, they are showing confidence in their technological capabilities as well. At the center of this is the lithium iron phosphate (LFP) battery. Last month, CATL launched the 'Shenxing' LFP battery, which significantly increases charging speed and driving range. This product can travel up to 400 km with a 10-minute charge. The maximum driving range exceeds 700 km. They also claimed to have overcome the LFP battery's weakness of poor performance in low temperatures. Mass production is planned to start by the end of this year, with electric vehicle integration beginning next year. CATL has firmly expressed its determination not to fall behind in technological competition by introducing new products not only in batteries but also in anode, cathode materials, and electrolytes.

Automaker BYD has made not only itself but also competitors such as Tesla, Ford, Toyota, and Hyundai its customers. Kia plans to apply BYD's LFP batteries to the China-specific model of the EV5.

CATL LFP Battery Driving Range (Source: Eugene Investment & Securities)

Researcher Han Byunghwa of Eugene Investment & Securities said, "Following Tesla, Hyundai, Ford, Rivian, Volkswagen, Stellantis, BMW, Mercedes, and Toyota have also started using LFP batteries," adding, "Domestic companies are preparing LFP batteries as well, but due to significant differences in price competitiveness and technology, China is expected to lead the LFP market for a long time."

China is also ahead in commercializing next-generation batteries. Beijing WeLion New Energy Technology has developed a semi-solid battery capable of driving 1,000 km on a single charge. Its energy density is 360 Wh/kg, higher than Tesla's 4680 battery (300 Wh/kg), attracting public attention.

Local production is crucial to supply heavy batteries. Overseas expansion is essential. This is why Korean battery companies' strength lies in securing overseas markets to counter China. However, they may bear the full burden of sluggish local electric vehicle demand.

Professor Park Cheolwan of Seojeong University expressed concern, saying, "Considering production costs in each country, if batteries made in the U.S. do not sell, they cannot be sold in other countries either," adding, "For LG Energy Solution and SK On, expanding production in the U.S. itself could become a burden." He continued, "China has Tesla's Gigafactory to observe and learn from, but we do not," and "There is no strong competitor to observe, learn from, or compete against," further stating, "The domestic market itself is weak, so isolation is possible."

[Image source=Yonhap News]