Increasing Pressure
China’s CATL, ranked first in the global battery market, recorded business performance that dwarfed those of the big three Korean battery makers in 2023. CATL is currently waging a price war based on its price competitiveness in LFP batteries, its flagship product. This is deepening a sense of crisis among the top three Korean battery makers.
CATL’s sales in 2022 stood at 328.6 billion yuan (62.4 trillion won or US$47.6 billion), a 152 percent increase from the previous year, according to energy research institute SNE Research and foreign media outlets on March 19. This was about 10 trillion won more than the combined sales of the three Korean battery companies -- LG Energy Solution (25.5 trillion won or US$19.4 billion), Samsung SDI (20.1 trillion won or US$15.3 billion), and SK On (7.6 trillion won or US$5.8 billion).
Its net profits far exceeded those of the three Korean companies. CATL’s net profit in 2022 sat at 30.72 billion yuan (about 5.8 trillion won or US$4.451 billion), up 92 percent from the previous year. This also overwhelmed those of the three Korean battery companies. The net profits of LG Energy Solution and Samsung SDI were 700 billion won (US$533 million) and 800 billion won (US$610 million), respectively. SK On posted a net loss of 1 trillion won (US$762 million). The market share gap also widened between CATL and Korean battery makers. CATL’s market share in 2022 was 37 percent, up 4 percentage points from the previous year. The market share of second-place LG Energy Solutions fell 6.5 percent over the same period to 23 percent.
CATL’s high profits are leading to its large-scale investments. The Chinese battery giant spent 15.5 billion yuan (2.9 trillion won or US$2.2 billion) on research and development in 2022, up 102 percent from the previous year year. LG Energy Solution and Samsung SDI spent 800 billion won (US$610 million) and 1 trillion won (US$762 million) on research and development, respectively.
Meanwhile, as the gap with CATL has widened, the three Korean battery companies are also expanding their shares in the LFP battery market dominated by China. The three Korean battery companies have mainly produced nickel, cobalt, and manganese (NCM) batteries, which are relatively expensive and have high energy density. But an increase in carmakers which adopted LFP batteries cheaper than NCM batteries are leading Korean batteries to expedite the development of LFP batteries.