LG Chem Expected to Outperform CATL of China
The three South Korean electric vehicle (EV) battery makers have begun to differentiate their strategies to penetrate global markets. LG Chem is making a foray into the fast-growing European EV market with fast-paced investment, while SK Innovation is making efforts to expand its presence in the Chinese market based on a joint venture with a local Chinese automaker. Samsung SDI is expected to quickly increase its market share through cooperation with Hyundai Motor and Kia Motors.
LG Chem is expected to achieve the biggest growth among global battery manufacturers for three years starting 2020. Baek Young-chan, a researcher at KB Securities, predicted that sales and operating profit of LG Chem's battery division will grow 37.7 percent and 59.9 percent between 2021 and 2022, respectively, outperforming its rival CATL of China. LG Chem ranked first in global EV battery market share in the first quarter and is likely to maintain its lead for the time being.
This is because the EV market in Europe is growing rapidly. In 2019, sales of EVs in the world broke down into 55 percent in China, 30 percent in Europe, and 15 percent in the United States. But many experts forecast that Europe, China and the United States will account for 50 percent, 40 percent, and 10 percent, respectively, in 2022.
LG Chem supplies batteries to Audi, Daimler, Renault, Volvo, Volkswagen and Jaguar. It has an estimated 70-plus percent share of the EV battery market in Europe, KB Securities says
SK Innovation is pinning its hopes on the Chinese EV market, which is recovering rapidly from the new coronavirus crisis. China's Beijing Automotive Industry Holding Co. will launch its premium brand "Arc Fox" and its electric sport utility vehicle "Alpha-T" in September 2020. They will be loaded with batteries produced by "Best," a joint venture between SK Innovation and Beijing Automotive Group. "The Alpha-T will be able to become a rival horse of the Tesla in the Chinese EV market as it is made in China and can run 653 kilometers on one single charge," said an industry insider.
The Chinese government's decision to keep in place its subsidy policy for eco-friendly cars until 2022 is also good news to SK Innovation as it can benefit from it.
Samsung SDI, the world's fourth-largest EV battery maker, is expected to increase its market share through cooperation with Hyundai Motor Group. Samsung Electronics vice chairman Lee Jae-yong and Hyundai Motor Group vice chairman Chung Eui-sun met at Samsung SDI's Cheonan factory on May 13 and exchanged opinions on next-generation EV battery technology. Hyundai Motor Group, which has only used batteries from LG Chem and SK Innovation, can help Samsung SDI raise its market share if it uses the latter’s products. In the first quarter of 2020, Hyundai and Kia ranked fourth in the global EV market with a combined 24,116 units, behind Tesla with 88,400 units, the Renault and Nissan Alliance with 39,355 units and Volkswagen Group with 33,846 units. Hyundai Motor Group's goal is to become the world's third-largest EV maker by 2025.