[Unstoppable K-Battery] Battery Big 3 Annual Sales 45 Trillion+... The Renaissance of 'K-Battery' Is Coming

LG Energy Solution, SK On, and Samsung SDI
Over 30% Sales Increase Compared to Last Year

Electric Vehicle New Models Announced One After Another
Supply Price Expectations Remain High in Second Half

Key Issues: Reducing Defect Rate and Securing Yield

[Asia Economy Reporter Jeong Dong-hoon] The annual sales of the three major battery companies this year have exceeded 45 trillion won, signaling rapid growth. The global electric vehicle sales, which had contracted in the first half of the year due to war and regional lockdowns, are expected to increase in the second half. Coupled with factors such as battery supply price hikes, there is growing anticipation that the battery industry is entering a 'renaissance period.'

◆ Annual Sales of 45 Trillion Won... ‘K-Battery’ Entering a Renaissance = According to the industry on the 2nd, the estimated annual sales of the three battery companies?LG Energy Solution (LG EnSol), SK On, and Samsung SDI?are over 45 trillion won this year. This represents an increase of about 30.8% compared to approximately 34.4 trillion won last year. LG EnSol, competing for the global industry No. 1 spot, raised its sales target this year from the previous 19.2 trillion won to over 22 trillion won. This calculation reflects expanded production volume due to new plant operations, additional orders secured, and raw material prices such as metals factored into the selling price. If LG EnSol surpasses 20 trillion won in sales, it will have doubled its revenue in two years since first breaking 10 trillion won with 12.57 trillion won in 2020. SK On, which achieved 2.5 trillion won in sales in the first half, is also expected to reach mid-7 trillion won by the end of the year.

Samsung SDI showed the strongest performance in the first half. It achieved sales of 8.8 trillion won in just the first half, marking a growth of over 40% compared to the same period last year. The market expects it to comfortably surpass last year's sales (13.5 trillion won) and possibly reach the high 10 trillion won range.

The battery industry faced multiple adverse factors in the first half of this year. Profitability deteriorated due to China's regional lockdowns caused by COVID-19, global logistics disruptions, rising raw material prices, and timing differences in applying price increases. Some sales volumes also decreased due to imbalances in vehicle semiconductor supply. However, external growth continued thanks to new plant operations and selling price increases.

◆ Wings for External Growth in the Second Half... The Key is Yield = Despite growing concerns about a global economic downturn, the battery industry expects performance improvements in the second half of this year. The combined capacity of new plants operated by the three battery companies in the second half is expected to exceed 63 GWh. Estimating that 1 GWh can supply batteries for about 15,000 electric vehicles, this means an additional annual production capacity sufficient for approximately 885,000 electric vehicles. LG EnSol plans to operate its joint venture 1st plant (35 GWh) with GM in Ohio, USA, in the third quarter this year, and Samsung SDI will also begin full-scale operation of its 2nd plant in G?d, Hungary (24 GWh), selling high-nickel batteries. SK On expects improved yield (good product ratio) at its Georgia plant in the USA (10 GWh), which started operations at the end of last year, and its 2nd plant in Hungary (10 GWh), which began operations this year.

New model launches by global automakers are lined up for the second half of this year, making explosive growth in electric vehicle sales a foreseeable future. According to the Korea Automotive Technology Institute, pure electric vehicle sales in Europe from 2018 to 2021 are estimated to have increased by an average of 77.3% annually. Notably, the share of pure electric vehicle sales in Europe jumped to 35.3% in 2020, far surpassing the US (11.7%) and Korea (2.1%). According to the International Energy Agency, the European electric vehicle market is expected to expand from 1.4 million units in 2020 to 5.7 million in 2025 and 13.3 million in 2030. Major customers of LG Energy Solution, such as Hyundai Motor (Ioniq 6?the new model name in parentheses), General Motors (GM, Cadillac Lyriq), and Chevrolet (Equinox), are launching new models in the second half of this year.

Samsung SDI will begin mass production at its 2nd plant in G?d, Hungary, in the second half of this year, fully commercializing sales of the high-value-added mid-to-large battery ‘Gen5.’ According to the industry, Samsung SDI’s production capacity at its Hungary plant is expected to increase from 13 GWh in 2020 to 24 GWh in 2021 and 37 GWh in 2022. In particular, Samsung SDI is discussing supplying BMW with ‘46-pie’ batteries (mid-to-large cylindrical batteries with a diameter of 46 mm), opening the possibility of large-scale expansion in the future. SK On aims to turn a profit in operating income in the fourth quarter. It expects profitability to improve by stabilizing yield at new plants such as the Georgia 1st plant and Hungary 2nd plant in the US in the second half of this year, as well as operating the 2nd plant in Yancheng, China, and continuing external growth.

However, it has become crucial to reduce defect rates and secure high yield at new plants. Since plants are operating worldwide in Europe, North America, China, and Southeast Asia, it is expected to take time to reduce defect rates below a certain level. The industry believes that a structure capable of generating profits can only be created if the yield rate exceeds 90%. Professor Park Cheol-wan of the Department of Automotive Engineering at Seojeong University said, "Battery production processes have low automation rates and plants are spread worldwide, making it difficult to secure skilled personnel. Competition to maintain good yield amid continuous changes in production processes will be intense."

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