US Battery Ecosystem Led by Korea

Battery Supply Shortage in the US
SK and LG Market Share Expected to Surge
Material Suppliers Also Entering Local Market Together

SK Promotes Use of Spent Batteries
LG Considering Establishment of ESS Facilities

[Asia Economy Reporter Choi Dae-yeol] Following the strengthening of collaboration between domestic battery companies and U.S. electric vehicle (EV) manufacturers, expectations are growing that they will lead the U.S. battery ecosystem by expanding their presence not only in battery materials business but also in the utilization of used batteries and the energy storage system (ESS) market.

According to industry sources on the 24th, currently, there are virtually no EV battery production facilities in the U.S. except for Tesla (35 GWh annually) and LG Energy Solution (5 GWh). SK Innovation’s Georgia plant, completed earlier this year, is currently in trial operation aiming for mass production within the year, and the joint plant of LG and General Motors (GM) is scheduled to start operations next year. Regarding batteries produced at these new plants, supply contracts were already signed several years ago, making it difficult to increase new customers.

The U.S. EV market remained at about 300,000 units annually until last year, which is only a quarter of the size of China and Europe, but it is expected to grow rapidly from this year onward due to policy effects such as subsidies. Battery demand is surging, but supply is not keeping pace. Jeon Chang-hyun, an analyst at IBK Investment & Securities, said, "Battery supply and demand in North America is expected to be seriously tight starting this year, with a shortage of more than 30% annually continuing from 2023. As EV sales outside the Tesla camp increase, the market share of domestic companies such as LG and SK, which are building joint plants locally, is expected to grow."

Electric vehicle battery pack made by Ultium Cells, a joint venture between LG Energy Solution and General Motors. Photo by LG Energy Solution

Leading global battery giants LG Energy Solution and SK Innovation are expanding production facilities in the U.S., and domestic material companies are also actively entering or expanding their presence locally. SK Innovation’s subsidiary SK IE Technology, which operates in the battery separator business, and Dongwha Enterprise, which produces electrolytes, are considering entering the U.S. market, while POSCO Chemical and EcoPro BM are reportedly coordinating expansions in the U.S. Automotive parts manufacturer Deokyang Industry recently decided to build a plant in Georgia, U.S., where SK Innovation and Kia have factories.

Regarding the representative upstream industry of battery reuse, SK Innovation is reportedly reviewing various options, including establishing a joint venture (JV) with local companies. The company has been conducting demonstration projects with Kia in Korea since last year, exploring various models for recycling used batteries. LG and GM’s U.S. joint venture recently signed a contract with Li-Cycle, the largest used battery recycling company in North America, to reuse various raw materials generated during battery cell production.

A thin lithium metal foil used as an anode material in lithium metal batteries developed by SolidEnergy Systems, a US-based all-solid-state battery development company. Photo by SK Inc.

Additionally, SK has become the third-largest shareholder by making an additional investment in SolidEnergy Systems, currently regarded as the most advanced developer of solid-state batteries, which are also attracting high interest in the U.S. LG Energy Solution is considering placing ESS production facilities locally, taking into account recent power shortages in some regions caused by cold waves in the U.S. Samsung SDI, which has so far operated battery cell plants only in Korea, China, and Europe, is reportedly exploring plans to establish a new local plant in the U.S. in the second half of this year due to increasing production needs.

An industry official said, "As large-scale production facilities are established locally in the U.S., the role of Korean companies is likely to grow in upstream industries with high growth potential, such as the utilization of used batteries."

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