LG-SK Battery Dispute Settlement and Its Aftermath... Raising Awareness of Battery Security Concerns

K-Battery Market Dominance Shaken... China Increases Market Share
Partial Battery Internalization Inevitable... Justifies Diversifying Battery Supply
Economic Security Status of Battery Industry Highlighted

[Asia Economy Reporter Hwang Yoon-joo] The dramatic end to the battery trade secret infringement war between LG Energy Solution and SK Innovation was largely due to the strong sense of crisis that both companies could become losers if the fight dragged on. While the two companies waged war for over two years, Chinese battery makers strengthened their market dominance, and unexpected variables such as automakers internalizing battery production emerged. This situation also raised concerns that the security status of the K-battery industry could be shaken.

◆Shaking Market Dominance= The global battery market is still in its infancy, as the largest demand sector?the electric vehicle market?is just emerging, and there is no clear leader or technological gap like in the semiconductor market. Not only existing battery companies but also automakers are rushing to enter the market.

According to market research firm SNE Research, last year China’s CATL maintained its top position for the fourth consecutive year with a 24% market share in the global battery market, closely followed by LG Energy Solution at 23.5%. Japan’s Panasonic ranked third with 18.5%, BYD (China) was fourth with 6.7%, and Samsung SDI and SK Innovation ranked fifth and sixth with 5.8% and 5.4%, respectively.

Looking at the countries, it seems that Korea and China are fiercely competing for the top spot, but the situation is not that simple. In the January-February period this year, CATL’s market share surged to 31.7%, while LG Energy Solution’s dropped to 19.2%.

◆Customer Defections One After Another... Automakers Accelerate Internalization= The pace of battery internalization and supply diversification by major automakers, key customers, has also accelerated. SK Innovation’s joint venture with Volkswagen, the world’s largest automaker, was effectively canceled. During the litigation period between the two companies, Volkswagen established a joint venture in China and announced internalization plans together with European battery company Northvolt. As a result, K-battery lost a strong customer.

General Motors (GM), a strong ally of LG Energy Solution, has also opened the possibility of developing batteries in-house. In March last year, GM unveiled its own developed battery and electric vehicle platform ‘Ultium,’ with a significant portion of the battery patents owned by GM.

To make matters worse, even smartphone maker Apple has started developing electric vehicles equipped with self-designed batteries. In particular, Japan’s Toyota plans to unveil a test vehicle equipped with the so-called ‘solid-state battery,’ known as the dream battery, this year, intensifying the competition to seize battery leadership.

◆K-Battery’s Security Leadership Also Shaken= The economic security status of the battery industry has also become a burden in this situation. U.S. President Joe Biden has strongly expressed his intention to build the electric vehicle industry value chain (supply chain) in the United States and create jobs. Concerns arose that the lawsuit could disrupt electric vehicle production by automakers with factories in the U.S., including GM and Ford, potentially affecting the Biden administration’s green policies. Ultimately, the agreement was reached under strong pressure from the U.S. government, and it is expected that the U.S. government’s influence on K-battery companies will increase going forward. A Ministry of Foreign Affairs official said, “This lawsuit showed that to reduce risks in global business, it is essential to solidify local industry and economic policies, diplomacy, and human networks,” adding, “The U.S. green policy framework and the battery business inevitably go hand in hand.”

Professor Son Seung-woo of the Department of Industrial Security at Chung-Ang University said, “With global battery competition unfolding so fiercely that it is difficult to predict even one step ahead, prolonged disputes between LG and SK are undesirable,” and added, “To enhance the competitiveness of K-battery, both companies should engage in fair competition but also cooperate with each other, and the government should actively support this.”

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