Raw Material Prices Rise... Why Are Korean Batteries Lowering Battery Costs?

US Imported Lithium-ion Battery
September Average Price Drops 13.1%
Demand Rises with Electric Vehicle Expansion
Lithium, Nickel, Manganese Prices Increase

[Asia Economy Reporter Choi Dae-yeol] As global competition intensifies over market share in electric vehicle batteries, Korean-made batteries are drawing attention for lowering prices.

According to an analysis of export-import statistics from the Korea International Trade Association on the 17th, the average import price of Korean-made lithium-ion batteries imported by the United States was $30.2 per kilogram as of September, down about 13.1% from last year's average of $34.7. Electric vehicle batteries have steadily decreased in price over the past few years as expensive material content has been reduced and major companies have achieved economies of scale.

However, the trend changed this year due to rising raw material prices. According to data from the Korea Resources Information Service, lithium, which is mainly used, surged more than threefold to 179,750 yuan per ton compared to early this year, and nickel, which was in the $11,000 per ton range at the beginning of last year, approached $20,000 this month, nearly doubling. Manganese prices also rose about twofold compared to the end of last year. The rapid increase in battery demand due to the spread of electric vehicles was not met with smooth supply accordingly.

Unlike Korea, the import prices of Chinese and Japanese batteries into the U.S. have remained almost the same as last year recently. Chinese batteries are priced at $22.7 per kilogram, nearly the same as last year's $22.9, and Japanese batteries are also similar at $46.6 compared to last year's $47.9. The U.S. has emerged as the world's largest battery importer this year by aggressively expanding electric vehicle adoption. Korea, China, and Japan account for a significant portion of global battery production, but the U.S. still lacks local battery factories and imports most of its demand from overseas.

Electric vehicle batteries piled up at Ford's Dearborn plant. Ford also formed a joint venture with SK to supply batteries.

Reducing Expensive Materials and Lowering Prices: Early Market Penetration Strategy Effective

Based on lithium-ion battery export value and weight by local governments, the export unit price of batteries from the Chungnam region fell 14.6% compared to last year. This figure compares last year's average export price ($42.9 per kilogram) with last month's average export price ($36.6). The average battery export price in Ulsan dropped about 6.9% during the same period. The average export price in Chungbuk was recorded at nearly the same level as last year. The three domestic battery companies have factories in Ulsan, Chungbuk, and Chungnam, where they manufacture batteries for export.

While Samsung and LG also produce batteries for energy storage systems (ESS) and small home appliances, SK currently only manufactures electric vehicle batteries. SK On, considered a latecomer among domestic battery companies, has rapidly grown through aggressive expansion and order acquisition strategies. The battery order volume announced along with last month's late-month earnings report was 1.6 TWh, enough to supply 22 million units based on the Ioniq 5.

In terms of value, it amounts to 220 trillion won, with supply contracts increasing by tens of trillions of won each month. The company is aggressively moving forward, even building factories before securing contracts with customers such as automakers. As of the third quarter this year, the company's battery business operating loss was 98.7 billion won, slightly higher than the previous quarter, but the loss rate relative to sales improved to about 12% compared to the past. The company expects to break even around next year.

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