IRA Expected to Benefit Korean Battery Makers
The U.S. Inflation Reduction Act (IRA) is expected to boost Korean companies' share of the North American electric vehicle (EV) battery market to around 70 percent.
SNE Research made the forecast at the Pohang International Conference 2022 held at the POSCO International Pavilion in Pohang, North Gyeongsang Province, on Nov. 24. Pohang is promoting itself as a global battery industry hub.
Before the IRA took effect, SNE Research predicted that the three Korean battery makers -- LG Energy Solution, SK On, and Samsung SDI –- will secure a combined battery production capacity of 280GWh in North America in 2025. This represents 53.2 percent of North America’s total battery production capacity of 526GWh.
However, with the announcement of the IRA in August, the outlook was revised. This is because China’s CATL, the world’s No. 1 battery manufacturer, scratched off its investment plan in North America as the IRA aims to remove China from a U.S.-led global battery supply chain.
SNE Research predicted that the three Korean battery makers will fill the void created by CATL’s investment cancellation, with their North American battery production capacity expected to increase to 355GWh in 2025, which amounts to 67.4 percent of the total production capacity in North America.
SNE Research also predicted that their order backlog would expand from 700 trillion won at the end of September to 1,000 trillion won by the end of 2023. By year, their order backlog will climb by 40 trillion won in 2023, 50 trillion won in 2024, and more than 100 trillion won in 2026 and 2027, respectively.