Korean Media: The Top Three Battery Companies in South Korea Are All Suffering Losses!
On January 17, the Korean media outlet "Herald Economic" published an article stating that the top three South Korean battery companies are deeply mired in losses. The electric vehicle subsidy policy of the Trump administration has become a sword, directly causing a sharp drop in performance. Given signs of temporary stagnation in the demand for electric vehicles, the entire industry is completely reshaping its survival strategy. Its core goal is to adjust the product portfolio and take energy storage systems (ESS) as a new growth engine.
According to sources in the battery industry, LG Energy Solution's operating loss for the fourth quarter of last year is expected to be 128.2 billion won. Samsung SDI and SK On also reported operating losses of 384.3 billion and 402.7 billion won, respectively. It is rare for these three South Korean battery companies to all report quarterly losses simultaneously.
The immediate trigger for the sudden drop in performance was clearly a policy factor from the United States. In September last year, the Donald Trump administration abolished the tax credit for advanced manufacturing production under the Inflation Reduction Act. After that, American vehicle manufacturers continuously revised their electric vehicle production plans, and battery demand plummeted rapidly.
In fact, only last month, LG Energy Solution canceled a contract worth about 1.35 trillion won for electric vehicle battery supply. The joint factory between SK On and Ford in the United States also announced its termination. This indicates that the business structure of South Korean battery companies centered on electric vehicles is facing limitations.
The battery industry sees ESS as a new breakthrough. Driven by a surge in power demand from artificial intelligence data centers, demand for large-scale ESS is growing rapidly. JPMorgan, a global investment bank, analyzed that "LG Energy Solution is expected to capture more than 35% of the U.S. ESS market before 2028," and added, "converting its electric vehicle production lines into ESS production lines will allow it to meet market demand and avoid any supply gaps."
To expand the ESS market, the three major South Korean battery companies are accelerating the launch of lithium iron phosphate batteries and strengthening localized production in the United States. LG Energy Solution invested 1.4 billion U.S. dollars to transform its factory in Holland, Michigan, into a dedicated ESS production base. The company plans to increase its ESS capacity to more than 50 gigawatt-hours this year and start producing lithium iron phosphate batteries needed for ESS at its Wujang energy plant in 2027. The lithium iron phosphate battery production line located in Queen Creek, Arizona, which had been temporarily suspended, will resume mass production this year.
However, the key issue lies in competition with Chinese companies. The lithium iron phosphate battery ESS market has been dominated by Chinese companies such as Contemporary Amperex Technology Co., Ltd. (CATL) and BYD. Industry insiders believe that while reducing dependence on China may bring opportunities, the key to success lies in how quickly to narrow the technological gap.
Original article: toutiao.com/article/1854563550309705/
Statement: This article represents the views of the author.