K-Battery Industry Increases Investment by 8 Trillion Won in 1 Year

Despite recent economic downturns and reduced subsidies globally leading to a slowdown in electric vehicle demand, the accumulated investments from South Korea’s three major battery companies -- LG Energy Solution, SK On, and Samsung SDI -- for this year have been confirmed to be double last year’s figure, surpassing the 16 trillion won (US$12.34 billion) mark.

According to industry sources on Nov. 19, the cumulative investment of the three major battery companies in both domestic and international markets for the third quarter of this year reached 16.75 trillion won, marking a whopping 105.3 percent increase compared to the same period last year, which was 8.16 trillion won.

LG Energy Solution led in investment during this period with 7.65 trillion won, followed by SK on with 6.66 trillion won and Samsung SDI with 2.44 trillion won. The most substantial increase came from SK on, which saw its investment surge by 184 percent in just one year. LG Energy Solution increased by 84.9 percent and Samsung SDI by 45.4 percent. The majority of the investment was allocated to facility installation, both domestically and internationally, as well as the addition of production lines.

The reason for the increased investment by the three major battery companies is analyzed to be the temporary downturn in electric vehicle demand. A representative from a major battery company said, “It is true that the electric vehicle market has become more challenging due to factors such as high interest rates and prices. However, there is a high likelihood of making investments as planned due to the unchanged long-term perspective on electric vehicles.” Recently, market research firm SNE Research reported a decrease in the growth rate of electric vehicles for this year, predicting a 30.6 percent growth, which is 5.8 percentage points lower than the previous forecast, compared to last year.

Their strategy is to overcome the current challenges through continued investment and the launch of new products.

The most urgent concern is China’s concentrated entry into lithium iron phosphate (LFP) batteries. LFP batteries, known for their lower energy density compared to nickel-cobalt-manganese (NCM) batteries primarily produced by the three major domestic battery companies, result in shorter electric vehicle driving ranges. However, their advantage lies in their lower cost.

In relation to this, the three major battery companies mentioned LFP batteries during their performance briefings for the third quarter held at the end of last month and the beginning of this month. Particularly, LG Energy Solution officially acknowledged its entry into the LFP batteries market and revealed plans for mass production by 2026.

SK on disclosed specific details, stating that it has completed the development of LFP battery cells and is in discussions with a company regarding supply. The company is currently investing 1.5 trillion won and aims to build the battery factory 3 in Seosan, South Chungcheong Province, with an annual target capacity of up to 14 gigawatt-hours (GWh) by 2025.

Samsung SDI has also disclosed plans to develop LFP materials by 2026 and is considering the construction of production facilities.