"High Market Share of Key Secondary Battery Materials in China... Stabilizing Supply and Fostering Domestic SoBuJang"

8th Korea Industry Federation Forum Seminar "The Present and Future of the 2nd Battery Industry"

[Asia Economy Reporter Yu Je-hoon] To maintain the global competitiveness of the domestic secondary battery manufacturing industry, urgent measures are needed to stabilize the supply chain to supplement the weak materials and raw materials base, foster the consumption, parts, and equipment industries, and diversify the portfolio.

The Korea Industrial Alliance Forum (KIAF) held an online seminar on the morning of the 23rd under the theme "The Present and Future of the Secondary Battery Industry." KIAF Chairman Jeong Manki explained the reason for the event, saying, "Korea is at the world’s top level in secondary battery manufacturing, but the materials and raw materials base is very weak, so active response is necessary."

According to a keynote presentation by Jeong Sun-nam, Vice Chairman of the Korea Battery Industry Association, the global carbon neutrality trend is expected to drive the secondary battery market size from $103.9 billion this year to $284.8 billion by 2030, growing at an average annual rate of 11.9%. In particular, the core lithium secondary battery market is projected to continue its high growth at an average annual rate of 14.6%, expanding from $68.5 billion to $234 billion.

The promising secondary battery market is led by electric vehicles. According to battery market research firm B3, as of last year, electric vehicles accounted for the largest share of lithium secondary battery demand at 51.9%, followed by mobile and IT at 39.7%, and energy storage systems (ESS) at 8.3%. Since the global electric vehicle market growth rate is predicted to reach an average annual rate of 13.5% until 2035, the demand for secondary batteries is inevitably expected to increase significantly.

Meanwhile, the domestic secondary battery manufacturing industry is maintaining global competitiveness by establishing joint ventures (JVs) with leading global automakers such as GM and Ford. In fact, the three major domestic battery companies (LG Energy Solution, SK Innovation, Samsung SDI) have signed supply contracts with major automakers and currently hold an order backlog worth approximately 300 trillion won.

The problem is that the domestic secondary battery industry’s dependence on overseas (China) materials and raw materials is high, and if supply issues arise, the entire industry could be at risk. In such a case, the final consumer goods industries using secondary batteries, such as automobiles and mobile phones, could also be shaken.

In fact, China holds overwhelming dominance over the four core materials of secondary batteries. For cathode materials, which account for 44% of manufacturing costs, Chinese companies have a 60.1% market share, Japanese companies 19.8%, while Korean companies hold only 9.5%. In the electrolyte and separator markets, Chinese companies’ shares reach 81.0% and 40.4%, respectively, whereas Korean companies remain at about 7-10%.

At the seminar, it was also observed that the key battleground in the secondary battery market driven by electric vehicles will be the ability to supply stable volumes and secure next-generation technologies. This is because, amid fierce competition among Korea, China, and Japan in the electric vehicle battery market, the rapid spread of electric vehicles is expected to cause a supply-demand imbalance starting in 2023, where battery supply will not keep up with demand. This is also why global automakers have recently started producing their own batteries.

Experts advised that to strengthen the competitiveness of the domestic secondary battery manufacturing industry, policies such as supply chain stabilization and fostering materials, parts, and equipment companies are needed from multiple angles. Vice Chairman Jeong said, "To secure the competitiveness of Korea’s secondary battery industry, it is urgent to expand demand through increased electric vehicle purchase incentives and establish a virtuous industrial cycle through tax support. Especially, fostering core materials, parts, and equipment companies to expand global production capacity is necessary."

Chairman Jeong also emphasized, "Efforts must be strengthened to enhance international cooperation to build a system that guarantees free trade of raw materials, expand the automotive powertrain portfolio including hydrogen vehicles and e-Fuel, and develop technologies and overseas resources to minimize risks."

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