[Bojo, Battery] Electrification Accelerates Commercial Vehicles, Another Breakthrough for the Battery Industry

High Performance Needed for Safety, Driving Range, and Power
Korean 3 Companies Prefer Long-Established and High-End Batteries

Electric commercial vehicles are becoming a breakthrough for the battery industry, which has encountered a chasm (temporary stagnation in a growth industry). As the electrification of commercial vehicles approaches due to eco-friendly policies, it is regarded as a market that can generate steady demand.

Europe Accelerates Electrification, Commercial Vehicle Electrification is Faster

According to the European Automobile Manufacturers Association (ACEA) on the 16th, out of 15.17 million vehicle sales in Europe last year, commercial vehicles accounted for about 2.32 million units. Among these, vans were 1.87 million, trucks 410,000, and buses 40,000 units. Europe, which implemented eco-friendly regulations first, leads in the speed of commercial vehicle electrification. According to global automotive research firm LMC Automotive, the compound annual growth rate of electric commercial vehicles in Europe is about 36%, and by 2030, the penetration rate of electric vehicles in the European commercial vehicle market is expected to exceed 50%. This means that from 2030 onwards, more than 1 million electric commercial vehicles will be sold annually. In contrast, the penetration rate of electric vehicles in the passenger car market is expected to approach 50% only by 2050.

Commercial vehicles account for about 28% of total greenhouse gas emissions, prompting countries to strengthen eco-friendly regulations. The UK has announced a ban on the sale of internal combustion engine trucks starting in 2040. The California state government in the US has set a policy goal to electrify 300,000 trucks by 2035. Regulations on internal combustion engine commercial vehicles are being tightened mainly in the European and North American markets.

Electric commercial vehicles refer to commercial vehicles powered by electric energy. Representative examples include electric buses, trucks, and vans. In the electric commercial vehicle market, the battery capacity per vehicle is about 11 times greater than that of general electric vehicles. While general electric vehicles require from tens to thousands of battery cells, electric commercial vehicles need up to tens of thousands of cells. Due to longer average driving distances and frequent operation in extreme conditions such as snow and rain, high-energy-density high-end batteries are required. The ternary batteries produced by Korean battery companies are well-suited for this purpose. Consequently, the average unit price is high, and long-term contracts are possible, making it a high value-added market with high 'profitability' and 'stability.'

Steady Demand for Commercial Vehicles, Battery Industry Gets a Breather

LG Energy Solution recently announced that it signed a long-term supply contract with Ford for commercial vehicle battery cells and modules totaling 109 GWh. Based on last year's battery cell price of $89 per kWh, this Ford contract is estimated to be worth over 13 trillion won. It is known to be a pouch-type ternary battery. The batteries supplied under this contract will be entirely produced at the Wroclaw plant in Poland. The Polish production base had a low operating rate of around 50% due to sluggish demand for electric vehicles in Europe, resulting in a heavy fixed cost burden.

LG Energy Solution stated, "Through the large-scale battery supply contract with Ford, we can further strengthen our order competitiveness and significantly contribute to improving the production efficiency of the Polish plant." In addition, LG Energy Solution supplies batteries for electric commercial vehicles of Japan's Isuzu, Poland's battery pack manufacturer and seller ICPT, and the US's Proidenberg E-Power System (FEPS).

Samsung SDI has maintained a long-term partnership with Volvo in commercial vehicles. Through cooperation since 2018, they launched the world's first large electric truck, the 'FH Electric,' in 2022. The vehicle is equipped with about 28,000 Samsung SDI 21700 high-nickel (91%) cylindrical batteries. SK On is expected to produce batteries for the electric van 'E-Transit' from next year at BlueOvalSK, a joint factory with Ford in the US.