[Click eStock] LG Energy Solution Gains Competitiveness Amid Rising Lithium Prices

by Hwang Junho

Published 20 Apr.2022 08:29(KST)

[Click eStock] LG Energy Solution Gains Competitiveness Amid Rising Lithium Prices

[Asia Economy Reporter Junho Hwang] Kiwoom Securities maintained LG Energy Solution's target stock price at 600,000 KRW on the 20th, stating that the price gap with Chinese LFP batteries is narrowing due to the rise in lithium prices.

Since last year, the proportion of Chinese LFP batteries has surpassed that of ternary batteries, exceeding 50%. Although the energy density per weight is inferior, this is attributed to improvements in technologies such as cell-to-pack that maximize space utilization, and cost advantages over ternary batteries due to the price increase of nickel/cobalt.

However, the price gap with ternary batteries has recently narrowed sharply, resulting in reduced price competitiveness. Kiwoom Securities reported that as of March, the cost gap between NCM811 and LFP cathode materials has narrowed to 11%. In November 2020, the cost of NCM811 cathode material was 50% higher than that of LFP cathode material, but the price difference has decreased due to the sharp rise in lithium (Li2CO3) prices.

In particular, LG Energy Solution is developing high-nickel cathode materials to compete with LFP batteries. To compensate for the short lifespan, they are applying a method using single crystals and developing cobalt-free materials to reduce costs.

The LG consortium, led by LG Energy Solution, plans to promote a large-scale project worth 11 trillion KRW to establish a battery value chain and secure stable supply of additional metals in Indonesia, the country with the largest nickel reserves.

Researcher Dongwook Lee of Kiwoom Securities analyzed, "Considering the growth of the US cylindrical battery market (power tools, startup electric vehicle companies), a new battery factory (11GWh) worth 1.7 trillion KRW is planned to be constructed," adding, "Due to increased supply volumes to major customers, the company's cylindrical battery shipments, which recorded a peak last year, are expected to increase further."