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South Korean EV Battery Manufacturers Still in the Red
Stock Prices of 3 Battery Firms on Steep Rise
South Korean EV Battery Manufacturers Still in the Red
  • By Jung Min-hee
  • February 5, 2020, 13:25
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SK Innovation engineer checks an electric vehicle battery cell production process.

CATL and Panasonic, the two largest electric vehicle (EV) battery manufacturers in the world, are continuing to improve their business performances. On the other hand, South Korean EV battery manufacturers on the top 10 list, that is, LG Chem, Samsung SDI and SK Innovation, still remain in the red.

Nevertheless, the three South Korean companies’ stock prices are rising fast after their recent earnings announcements. This is because investors are thinking that they would have earned more money if the South Korean government had not hindered them in the energy storage system (ESS) industry.

Panasonic announced on Feb. 4 that its EV battery business unit in the United States, which is working with Tesla, recorded its first quarterly net profit in the fourth quarter of 2019. The company explained that a rapid increase in vehicle supply from Tesla led to more battery production and higher raw material price competitiveness. It is also said that Tesla’s recent decision to purchase cylindrical batteries from LG Chem and CATL alleviated Panasonic’s burden related to the expansion of the co-invested Gigafactory.

The profitability of CATL is expected to have soared, too. Specifically, its 2019 net profit is estimated at somewhere between 4.06 billion yuan and 4.91 billion yuan, up 20 percent to 45 percent from a year ago.

Meanwhile, the losses of the battery business units of LG Chem and Samsung SDI increased in the fourth quarter of 2019, when they had to spend one-off costs of 300 billion won and 200 billion won in responding to ESS fires.

In South Korea, a series of ESS fires broke out last year. Although the South Korean government is currently investigating the causes of the fires, the two companies are preparing compensation and safety improvement measures with their own budgets.

The one-off costs will increase if the government blames them. However, many in the industry are asserting that they are not responsible, saying such fires occurred only in South Korea with the same systems in use in multiple countries.

In the meantime, the stock price of LG Chem jumped for two days in a row after its earnings announcement on Feb. 3. The price rose more than 10 percent after Jan. 31 and Samsung SDI showed a similar rate of increase. That of SK Innovation recovered immediately after a fall and is about to reach late last month’s level of 130,000 won per share.