"Suddenly Halved"... Secondary Battery Stocks 'Struggling'

Impact of Electric Vehicle Market Slowdown
Concerns Over Weak Q4 Earnings Forecast

Shares of secondary battery companies have fallen to about half of last year's peak and have struggled to rebound. Concerns over a slowdown in the secondary battery front market, such as electric vehicles, appear to be continuously affecting the market.

On the 4th, LG Energy Solution's closing price was 419,000 KRW. This represents a 31.54% decline from the all-time high of 612,000 KRW recorded on June 12 last year, based on the closing price. Samsung SDI experienced a similar trend, dropping from 793,000 KRW to 445,000 KRW, a 43.88% decrease. The same applies to secondary battery stocks listed on the KOSDAQ. EcoPro and EcoPro BM fell from last year's peaks of 1,293,000 KRW and 462,000 KRW to 634,000 KRW and 279,000 KRW, respectively, marking declines of 50.97% and 39.61% from their highs.

The decline in secondary battery stocks is interpreted as being influenced by a slowdown in demand in the front market, namely electric vehicles. According to energy market research firm SNE Research, global electric vehicle registrations are expected to reach approximately 13.77 million units last year. This figure is 1.07 million units less than the 14.84 million units forecasted in the first half of last year. The growth rate was also revised downward from 36.4% to 30.6%, indicating an anticipated slowdown in the electric vehicle market.

In fact, global electric vehicle sales are slowing down. According to Samsung Securities, global eco-friendly vehicle sales in November last year were 1.42 million units, a 29% increase compared to the same month the previous year. However, this only represented a 7.24% increase compared to the previous month.

The biggest reason for the slowdown in the electric vehicle market is reduced consumer spending. High interest rates have made it difficult for people to purchase cars. Additionally, electric vehicles are more expensive compared to conventional internal combustion engine vehicles. Furthermore, although it varies by country, there is an increasing trend of reducing or abolishing electric vehicle subsidies.

As concerns over the slowdown in the front market grow, the performance of secondary battery companies is also expected to deteriorate. Anna Lee, a researcher at Yuanta Securities, stated, "The domestic secondary battery sector is expected to report poor fourth-quarter results due to decreased electric vehicle battery sales, a drop in average selling price (ASP), and one-time costs. Cathode material companies are also expected to continue low operating rates in the fourth quarter following the third quarter, as cell companies continue to deplete inventory, with one-time costs added, leading to operating losses."

Jang Jeong-hoon, a researcher at Samsung Securities, also explained, "Starting from the end of this month, cell companies will begin reviewing their fourth-quarter performance. Compared to the situation at the end of October, when third-quarter results were announced, it seems highly likely that the market expectations will be missed in the mid-to-late fourth quarter due to sluggish sales of European and American automakers."

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