The South Korean battery industry, on the brink of achieving an annual export milestone of US$10 billion, has seen a slowdown in its growth momentum. This deceleration is attributed to a reduction in battery demand due to a slowdown in electric vehicle (EV) demand, along with the relocation of production bases by domestic battery manufacturers to Europe and the United States, leading to a slowdown in exports.
According to the Ministry of Trade, Industry and Energy on Feb. 4, South Korea’s secondary battery exports amounted to US$9.83 billion last year, a 1.6% decrease from the previous year. This is the first time since 2015, eight years ago, that the annual secondary battery exports have declined compared to the previous year.
South Korea’s secondary battery exports first surpassed US$5 billion in 2017 and had been rapidly increasing, reaching US$9.98 billion in 2022, nearly hitting the US$10 billion mark. However, last year’s export decline prevented the industry from crossing the US$10 billion threshold, indicating a break in the upward trend.
The weakening of secondary battery exports has accelerated this year, with January exports totaling US$590 million, a 26.2% decrease compared to the same month last year.
Despite a general recovery in exports, with 13 out of the 15 major export items classified by the government, including semiconductors, showing an increase, secondary batteries and wireless communication devices (down 14.2%) were the only categories to see a decline.
The share of secondary battery exports in South Korea’s total exports also decreased. Last year it was 1.6%, higher than home appliances (1.3%), but in January, it fell to 1.1%, lower than home appliances (1.2%).
As export growth has slowed, imports of secondary batteries, mainly from China, have rapidly increased, leading to a reduction in the trade surplus for secondary batteries. South Korea’s position as a net exporter of batteries is gradually weakening.
The trade surplus for secondary batteries, which peaked at US$5.83 billion in 2019, decreased to US$900 million last year.
The weakening of secondary battery exports in the short term has been influenced by a slowdown in EV demand since the second half of last year.
In response to changes in the trade environment, such as the U.S. Inflation Reduction Act (IRA), major battery companies like LG Energy Solution, SK on, and Samsung SDI have accelerated the operation of overseas production bases in North America and Europe. This has led to a structural factor contributing to the slowing growth of “domestic secondary battery” exports.
The Korea Trade-Investment Promotion Agency (KOTRA) recently stated in its “Global Secondary Battery Market Trends” report that the secondary battery market is expected to continue growing as the EV market expands amid the major countries’ carbon-neutral policies. The report emphasizes the need for product competitiveness through the development of high-functionality technologies as the market matures.