Despite the 'Electric Vehicle Chasm'... Chinese Batteries Expand Market Share

Global Market Sales Excluding China
CATL Ranks 1st with 27.7 GWh
BYD Grows Rapidly by 164.8%
Korean Companies Fall Below Average Growth Rate

Amid the electric vehicle chasm (temporary stagnation in a growth industry), Chinese battery manufacturers are expanding their market share. South Korean battery companies, whose growth momentum has slowed, have even recorded negative growth due to the volume offensive from China.

According to market research firm SNE Research on the 11th, in the ranking of electric vehicle battery usage in the global market excluding China from January to April this year, China's CATL took first place with 27.7GWh. Despite the chasm, this represents a 16.2% increase compared to the same period last year. Notably, BYD, which has recently attracted attention, surged 164.8% to 4.0GWh, jumping to sixth place.

On the other hand, the growth of the three domestic battery companies?LG Energy Solution, SK On, and Samsung SDI?has somewhat stalled. LG Energy Solution grew by 7.1% (26.0GWh) compared to the same period last year, falling short of the average growth rate (13.8%). Samsung SDI showed the highest growth rate among the three domestic companies at 33.1% (10.9GWh). SK On experienced a decline with a -1.3% (10.3GWh) growth rate.

The strong performance of Chinese battery companies amid the chasm is largely due to their expanded influence in Europe, the world's largest electric vehicle and battery market. Europe is the fiercest battleground for the electric vehicle and battery market. China is targeting the European market by leveraging the price competitiveness of NCM (Nickel-Cobalt-Manganese) batteries rather than LFP (Lithium Iron Phosphate). NCM batteries have been considered a strength of Korean companies, but they are now facing an onslaught from Chinese companies using low prices as a weapon. Chinese companies are targeting the market with mid-nickel batteries (nickel content in cathode material between 50-60%) such as NCM523 (Nickel 5, Cobalt 2, Manganese 3) and NCM622 (Nickel 6, Cobalt 2, Manganese 2), which differs from Korean companies that emphasize high-nickel batteries with over 80% nickel content. High-nickel batteries have excellent energy density but are expensive. As the electric vehicle market expands and the high-interest-rate environment leads to a preference for mid- to low-priced electric vehicles, customers have become more price-sensitive. This is the background for the rise in China's market share in Europe.

According to securities firm UBS's forecast, the market share of the three Korean battery companies in Europe was estimated to be around 60% last year but is expected to fall to 40% by 2027. During the same period, the market share of Chinese batteries is predicted to rise from 30% to 50%, replacing the share of Korean companies.

The factory operating rates of the three battery companies significantly declined in the first quarter of this year. LG Energy Solution announced that the average operating rate of its domestic and overseas plants was 57.4% in the first quarter. In particular, the operating rate of its Poland plant is estimated to have dropped sharply. This is due to a combination of factors including economic instability in Europe, subsidy reductions, and intensified competition with Chinese companies. SK Innovation revealed that SK On's battery business had an average operating rate of 69.5% in the first quarter, a nearly 30 percentage point drop from 96.1% in the first quarter of last year. Samsung SDI has not disclosed the operating rate of its medium- and large-sized battery plants for electric vehicles.

Professor Lee Ho-geun of the Future Automotive Department at Daeduk College explained, "The three domestic battery companies cannot help but feel a sense of crisis due to the offensive by Chinese companies. Especially, Chinese battery companies like CATL have secured large amounts of mines and raw materials and are enhancing competitiveness through price discounts, so the situation requires even more vigilance."