Nomura "Battery Market to Improve in Late 2025... Need to Further Cut Investments"

Nomura Financial Investment's Head of Department, Park Se-young, is presenting at the '2024 SNE Battery Day' held on the 23rd. Photo by Kang Hee-jong

Currently, the global battery market is experiencing a so-called chasm, which indicates a temporary stagnation in demand, and it is expected that the market will improve only in the second half of next year. Similar to the semiconductor industry, the battery market goes through cycles, and it is analyzed that reducing investments is necessary for the business conditions to improve.

On the 23rd, Se-young Park, Head of Nomura Financial Investment, attended the '2024 SNE Battery Day' held at the Science and Technology Center in Yeoksam-dong, Seoul, and said, "I used to think it was a 'long-term growth (Secular Growth)' market with continuous upward trends in electric vehicles, but now it seems we need to understand that it is not the case." He added, "Just as semiconductors and raw materials have cycles, the electric vehicle market also has cycles, and investment strategies should be planned accordingly."

A long-term growth market refers to a market that continuously grows significantly due to strong new demand driven by technological innovation. In contrast, cyclical growth refers to growth that repeats periods of recession and recovery.

Head Park pointed out that to overcome the current chasm in the electric vehicle and battery markets, costs must be reduced, consumer conditions analyzed, and supply adjusted. He said, "In any market, the point at which investment costs are at their lowest can be the turning point of the cycle," and forecasted, "The situation may improve somewhat in the second half of next year." He also mentioned that the battery industry should reduce investment less drastically to overcome the current situation.

Additionally, he suggested that to overcome the chasm, electric vehicle prices should be further lowered through cost reduction, and various models should be launched to stimulate demand. From the consumer's perspective, functions such as charging time and driving range need to be improved, and from the company's perspective, conditions should be created where both companies and consumers can win through profit generation.

Meanwhile, Nomura Securities forecasted that the global battery market will grow at an average annual rate of 15.5% from 2024 to 2030, which is lower than the 16.9% forecast made a year ago. By region, the United States is expected to record the highest growth rate at 25.7%. Europe is projected to grow by 11.8%, and China by 11.5%. The analysis suggests that as the electric vehicle market, which had expanded mainly in China and Europe, becomes saturated, the growth center will shift to the United States, where penetration rates are relatively low.

It is predicted that if U.S. President Donald Trump is re-elected in the November presidential election, electric vehicle subsidies under the Inflation Reduction Act (IRA) will be abolished. However, the Advanced Manufacturing Production Credit (AMPC) system, which provides benefits to companies investing in the U.S., is expected to be maintained.