Korean Battery Producers Beefing up US Business Arms
The author is an analyst of NH Investment & Securities. He can be reached at j.ko@nhqv.com. -- Ed.
The presence of Korean battery makers in the US market is primed to continue expanding. With both supply and demand conditions looking favorable for Korean battery players to hone their US business strategies, we expect them to enter the US market more actively going forward.
Korean battery makers beefing up their US business arms
With both supply and demand conditions looking favorable for Korean battery players to hone their US business strategies, we expect them to enter the US market more actively going forward.
In terms of demand, the use of Korean company-made batteries (‘K-batteries’) is set to rise further in line with strengthening partnerships between US EV makers and Korean battery makers. For example, GM has been making facility investments since the establishment of Ultium Cells (JV with LG Energy Solution), and new US EV start-ups are known to be inking battery supply contracts with Korean battery makers.
On the supply side, Korean battery makers are planning to expand their facility investments in order to strengthen their presences in the US EV market. At present, only three major battery makers (two Korean companies and one other firm) are building battery facilities in the US. In contrast, a dozen major battery makers (three Korean companies and nine others) are already proceeding with or have announced battery facilities in the European market. Thus, given the relative lack of competition in the US, it looks advantageous at this juncture for Korean battery makers to expand their businesses presences there. By 2025, Korean companies’ combined share of the US EV battery market (based on EV batteries manufactured in the US) is estimated to reach 60%. The effectuation of the USMCA (US, Mexico, and Canada) agreement should provide further motivation for Korean battery makers to expand their investments in US production facilities.
Focus on: 1) cell makers actively investing in US; 2) materials highly needed for local production
We believe that LG Energy Solution and SK Innovation, both of which are actively investing in the US, will be the dominant US market forces among Korean battery cell makers. Business conditions for materials players should be favorable as LG Energy Solution and SK Innovation’s use of Korean materials will be high. At this point, the materials that will most likely needed to be produced in the US are electrolyte and cathode materials. Related beneficiaries are to include EcoPro BM, POSCO Chemical, Enchem (non-listed), and Donghwa Company.