Despite the current economic downturn, South Korea’s top three battery manufacturers are ramping up their investments in infrastructure this year to strengthen their business foundations. According to industry sources on Feb. 18, LG Energy Solution plans to invest approximately 10.9 trillion won in battery production facilities this year, similar to last year’s investment. Currently, LG Energy Solution is expanding its global production capabilities, operating and constructing eight production facilities in North America alone, including joint ventures with General Motors (GM), Stellantis, Honda, and Hyundai Motor.
The funds required for these investments will primarily be covered by profits generated from sales growth. In addition, the company plans to secure investment capital through issuing corporate bonds and other forms of external borrowing. Recently, LG Energy Solution confirmed the issuance of corporate bonds worth 1.6 trillion won (US$1.2 billion), the largest single issuance to date, with 1.28 trillion won allocated for joint venture investments and 320 billion won for purchasing cathode materials.
This continuous investment aims to secure large-scale production capabilities and next-generation battery technology, widening the gap with competitors, including Chinese battery companies. LG Energy Solution plans to increase its annual battery production capacity from 140 GWh in 2020 to between 550 and 570 GWh by 2026. Additionally, the company intends to start mass production of the “4680 battery,” considered the next-generation cylindrical battery, as early as August. This battery, which is to be used in Tesla electric vehicles, offers five times the energy density and six times the output of the current 2170 battery, extending driving range by 16%.
LG Energy Solution is also working on differentiating its products by increasing the nickel content in its premium high-nickel batteries from 80% to over 90% to enhance energy density. The company is accelerating its product portfolio expansion, including the production of lithium iron phosphate (LFP) batteries for mid- to low-end electric vehicles, starting from the second half of next year.
Samsung Electronics Chairman Lee Jae-yong, during his first overseas trip of the year to the Samsung SDI Malaysia facility on Feb. 9, emphasized the importance of bold investment even in difficult times to maintain competitiveness in the global electric vehicle market. He encouraged the company to lead change through bold challenges and to create new value and solid competitiveness.
Samsung SDI, operating a factory in Malaysia, is investing 1.7 trillion won from 2022 to build a second factory in response to the demand for cylindrical batteries. Scheduled for completion in 2025, this second factory will start mass production of the PRiMX 21700 cylindrical battery this year, used in various products including power tools and electric vehicles. Additionally, Samsung SDI is constructing a joint venture factory with Stellantis in Indiana in the U.S. with an investment of 1.6313 trillion won. The company plans to start construction of a second factory with Stellantis and a joint venture factory with General Motors (GM) this year, with investments totaling 2.6556 trillion won and US$1.5 billion dollars, respectively. Securities analysts predict that Samsung SDI will invest approximately 5 trillion won in facility investments this year, the largest value to date.
SK on plans to invest 7.5 trillion won in facility investments this year, focusing on the North American region. This investment will be used for the BlueOval SK joint venture plant with Ford Motor in Tennessee and the joint venture plant with Hyundai Motor in Georgia. SK on will complete the expansion of its third plant in Hungary (30 GWh) and the Yancheng plant in China (33 GWh) in the first half of this year, increasing its annual battery production level from 88 GWh last year to 152 GWh this year. Next year, the company plans to operate plants in Kentucky (129 GWh) and Georgia (35 GWh), achieving a large-scale production capacity of over 200 GWh.