The Leader of the 'Battery Alliance' Takes Direct Action

[Asia Economy Reporter So-yeon Park] Corporate heads have staked their lives on future mobility and battery sectors, considered the next major growth engines following semiconductors. Since the future car and battery businesses are highly technology-intensive, producing quality products without close cooperation is difficult, and controlling production volume solely through supply contracts is also challenging. Recently, group chairpersons have accelerated the formation of alliances by personally visiting the production lines of partner companies to assess the level of innovative technology.

According to the business community on the 20th, Chung Eui-sun, Vice Chairman of Hyundai Motor Group, and Koo Kwang-mo, Chairman of LG Group, are scheduled to tour the electric vehicle battery production line at LG Chem’s Ochang plant on the 22nd and discuss comprehensive cooperation plans related to electric vehicles.

Last month, Vice Chairman Chung met with Samsung Electronics Vice Chairman Lee Jae-yong at Samsung SDI’s Cheonan plant, another electric vehicle battery manufacturer. This marks his second meeting and battery plant visit with another group chairman.

Hyundai Motor and LG Chem already have an electric vehicle partnership. Hyundai’s electric vehicles primarily use LG Chem batteries. LG Chem was also selected as a supplier for the dedicated platform electric vehicle to be launched in 2022.

LG Chem is not only the top domestic battery manufacturer but also ranked first globally last quarter, according to SNE Research.

On the 18th, the two companies announced a joint program to identify promising global startups in the electric vehicle and battery sectors to secure core technological capabilities in advance, with plans for strategic investments following technology verification.

This is the first official meeting between Vice Chairman Chung and Chairman Koo. Vice Chairman Chung stepped into a leading management role upon his promotion in September 2018, while Chairman Koo has been in his position for less than two years.

Vice Chairman Chung is also expected to meet soon with SK Group Chairman Chey Tae-won. SK Group mainly supplies batteries to Kia Motors through SK Innovation. SK Innovation secured a large volume of dedicated platform electric vehicles to be launched next year.

Amid the management crisis caused by the COVID-19 pandemic, the consecutive meetings of group chairpersons have attracted attention. Although major group heads often meet at external events and privately, it is rare for their one-on-one business meetings or visits to each other’s workplaces to be publicly disclosed.

Industry observers note that Vice Chairman Chung’s series of meetings with the heads of the three domestic electric vehicle battery manufacturers aligns with global automakers’ recent policies to expand electric vehicle supply.

LG Chem, Samsung SDI, and SK Innovation, along with China’s CATL and Japan’s Panasonic, dominate the global electric vehicle battery market.

With strong environmental regulations in Europe and electric vehicle subsidy policies worldwide, electric vehicle supply is increasing, leading to a shortage in the supply of the core component, batteries.

Industry and market research organizations predict that a 'battery crisis' caused by battery supply shortages could occur as early as next year or by the year after at the latest.

In this context, Hyundai Motor, which is recently expanding electric vehicle supply, is seen by the industry as strengthening its 'alliance' with the three domestic battery companies to secure battery dominance.

Hyundai Kia Motors is aggressive in electric vehicle production and sales, ranking fourth globally with 24,116 electric vehicles sold in the first quarter of this year.

Global automakers such as Volkswagen have recently established joint ventures with battery companies or expanded supply cooperation.

Therefore, some speculate that Hyundai Motor might select one battery company after reviewing the three and establish a joint venture.

However, given that the three global battery companies are domestically based, the prevailing view favors strengthening alliances with all three rather than forming a joint venture with a single company.

The business community also anticipates that the four major groups?Hyundai Kia Motors, Samsung, LG, and SK?will propose joint cooperation plans for future car development, including electric vehicles.

This content was produced with the assistance of AI translation services.