[Biz View] Battery Exports Reach All-Time High, Trade Balance Declines for Second Consecutive Year

Battery Imports Increase by Over 70%... Export Growth Five Times Higher
Domestic Demand Rises While Production Facilities of Three Companies Remain Unchanged
Existing Facilities Even Reduced... Focus on Expanding Overseas Plants

Electric vehicle battery pack from Samsung SDI exhibited at the battery specialized exhibition InterBattery 2021

[Asia Economy Reporter Choi Dae-yeol] Last year, South Korea's secondary battery (battery) exports amounted to $8.673 billion, marking an increase of more than 15% compared to the previous year and reaching an all-time high. Although the performance was commendable, the underlying situation is not entirely positive.

First, imports into South Korea have increased even more than the rise in battery exports, causing the trade balance to shrink. According to the Korea International Trade Association, imports from January to November last year totaled $3.2 billion, an increase of over 77% compared to the previous year. In terms of growth rate, this is nearly five times higher than exports.

Although detailed import data by major items for last month has not been disclosed, considering that battery imports increased to around $300 to $400 million per month in the second half of last year, the battery trade balance for last year is estimated to have been around $5 billion. The battery trade balance first exceeded $5 billion in 2017, reaching $5.057 billion. It peaked at $5.835 billion in 2019, then shrank for two consecutive years through 2020 ($5.05 billion) and last year.

In May of last year, President Moon Jae-in is receiving an explanation during his visit to the SK Battery factory in Georgia, USA.

Battery Demand Rises with Increased Electric Vehicle and ESS Adoption
New Growth Industries like UAM and Robots Also Battery-Based
Preparing for Moves by the US and Others to Attract Domestic Battery Plants

In South Korea, demand for lithium-ion batteries has increased as electric vehicle production has grown, but supply and demand have been difficult to meet with domestic factory output alone, leading to increased imports of foreign products. Most electric vehicle models produced and sold domestically by Hyundai Motor and Kia use SK batteries, but SK's domestic production capacity is only about 4.7 GWh. SK is reported to have supplied Hyundai and Kia with imported batteries produced at overseas plants in China and elsewhere. Even if produced at overseas plants operated by domestic companies and brought into South Korea, these are classified as imports.

The problem lies ahead. A significant portion of battery exports and imports are lithium-ion batteries, and the three major domestic players (LG, SK, Samsung), who are global players, are focusing on expanding overseas facilities. Some companies are reportedly considering reducing existing domestic facilities rather than expanding them. This is because manpower supply is not smooth, and they need to focus more on overseas plants that are about to increase capacity and begin operation.

LG Energy Solution and the joint venture between General Motors (GM) and LG Energy Solution, Ultium Cells, are building a battery joint factory in Ohio, USA.

It is physically difficult to increase domestic production, but battery demand in South Korea is likely to continue growing steadily. Not only electric vehicles and ESS, but also markets in areas where battery usage was previously minimal, such as Urban Air Mobility (UAM) and robots, are expected to expand. This outlook is reinforced by the fact that the trade balance is retreating as imports increase while export growth slows and has effectively peaked.

Batteries are one of the 15 major export items designated by the government, alongside semiconductors and petrochemical products, and last year showed the smallest increase in export value among these 15 products. The total export amount was also among the lowest, along with home appliances. The fact that the increase was the lowest during last year's historic export boom suggests that the battery's position in exports is unlikely to rise further. This contrasts with advanced countries such as the US, China, and Europe, which foresee changes in energy consumption patterns and are trying to establish domestic battery facilities at all costs.

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