Chinese companies are mounting a serious challenge to Korean rivals in the global secondary cell market. So far, Korea has dominated the market, helped by Samsung SDI and LG Chem, but China is becoming a formidable opponent due to its enormous market demand.
According to data compiled by market research firm B3 and SNE Research on November 17, Chinese firms are growing fast in the global lithium-ion secondary cell market.
This year, Samsung SDI has sold 1.122 billion cells, maintaining the top spot since 2010, followed by LG Chem (715 million). Thanks to the two companies, Korea represents 40% of the global market. However, compared to the same period in the previous year, Samsung SDI’s annual revenues have risen by only 5%. Furthermore, LG Chem is likely to suffer a 1% reduction in sales.
In contrast, Chinese companies are growing fast. Not only have the four major companies ATL, BYD, BAK, and Lishen broken into the top 10 global production rankings, but also has Coslight, which used to be a second-tier company.
In particular, ATL, which comprises 5.5% of the global market, grew 34% in sales last year. This year, 5% revenue growth is expected. Lishen’s sales increased by 87% in 2012, and a 19% increase in sales is projected this year. Meanwhile, Coslight posted a 125% revenue increase in 2012, and its sales growth in 2013 is estimated to be 55%. Currently, the firm ranks 8th with a 3.4% market share.
In total, Chinese manufacturers (second-tier companies included) constitute 42% of the total, more than 35.9% of Samsung SDI and LG Chem’s combined market share. In the future, a Chinese company larger than a Korean firm could be created, since unprofitable Chinese firms might merge.
There is growing demand in China, and therefore the Chinese rechargeable battery market is expanding amid stiff price competition. Unlike China, the demand for rechargeable batteries used in smartphones is not likely to grow further in Korea, since the smartphone market has fully grown. On top of that, it will not be easy to find additional growth engines, owing to Samsung and LG’s domination in the rechargeable battery market.
To add insult to injury, Japanese companies seem to be more active. For example, Panasonic has recently decided to receive 2 billion lithium-ion batteries for hybrid and electric vehicles from electric car company Tesla by 2017.
In response, Samsung SDI and LG Chem are planning to dominate the market with high-value-added products based on technical expertise. The two companies already commercialized some of their flexible batteries.
Specifically, Samsung plans to popularize its flexible solid state battery that does not burst into flames. LG also showcased the first flexible cable-type lithium-ion battery.
An industry source said, “A gap in polymer-making-technology and lithium-ion technology seems to have narrowed. High-capacity and long-lived lithium-ion batteries will be possible because of a recently-developed revolutionary polymer-making technology for lithium-ion batteries.”
Next year, the global battery market is likely to grow rapidly. The growth will be led by an increasing demand for rechargeable batteries and secondary cells, caused by a rise in the supply of smartphone manufacturers such as Lenovo, Huawei, and ZTE, and the expanded production of Tesla’s electric cars.
The industry anticipates that the global lithium-ion battery market will reach 70 trillion won (US$66 billion) in 2020 from 17 trillion won in 2013 (US$16 billion).