Chinese companies’ share in the European electric vehicle (EV) battery market is sharply rising. Concurrently, Korean battery companies, which have been strong players in the European market, have seen their share on the decline, losing ground to their Chinese competitors.
According to market research firm SNE Research on Oct. 29, Chinese battery cell makers’ share of the European market jumped from 15 percent in 2020 to 39 percent in the first half of this year, while Korean companies’ dropped from 68 percent to 58 percent over the same period. Korean companies’ market share has been declining since peaking at 70.6 percent in 2021.
Yet, demand for EVs in Europe has not contracted. Sales of battery electric vehicles (BEVs) in Europe are reaching new heights, with 194,000 units sold in August, up 103.2 percent year on year, according to Hi Investment & Securities. While sales of plug-in hybrid electric vehicles (PHEVs) were down 15.7 percent year on year, demand remains robust as BEVs account for a large share of the market. BEVs have four to five times the battery cell capacity per vehicle.
Korean companies’ position is expected to shrink in the European battery market. First, the European market share of Chinese automotive OEM automakers such as Geely and Shanghai Automotive Industry Corporation (SAIC) has recently surged to 17 percent. The Chinese automotive OEM automakers use CATL’s ternary cobalt carbon monoxide (NCM) battery cells. In addition, the adoption of LFP batteries by European automakers is in full swing. LFP batteries have been dominated by Chinese manufacturers. They have the advantage of being cheaper than NCM batteries mainly produced by Korean companies.
For Korean companies to regain their share in the European market, they need to have strong price competitiveness in order to win a price war with their Chinese rivals. Korean companies need to actively respond to growing demand for LFP batteries in order to compete with the Chinese rivals who have been leading the development of cheap LFP batteries since early on.
Indeed, Korean battery companies have begun to make moves. In a recent earnings call, LG Energy Solution announced that it will mass-produce LFP batteries for electric vehicles starting from 2026. This is the first time LG Energy Solution has formalized a mass production target for LFP batteries for EVs. Samsung SDI and SK on are also in the process of promoting or considering volume production of LFP batteries.