Despite a recent economic downturn and a global slowdown in electric vehicle demand, South Korea's three major battery companies have collectively invested over 16 trillion won (US$12.34 billion) this year, doubling last year's figure. The substantial surge in investments, confirmed by industry sources on November 19, reflects a resilient commitment to long-term perspectives on electric vehicles, even in the face of temporary market challenges.
LG Energy Solution emerged as the leader in investment during the third quarter, contributing 7.65 trillion won, followed by SK On with 6.66 trillion won and Samsung SDI with 2.44 trillion won. Notably, SK On experienced the most significant increase, with a remarkable 184 percent surge in investment over the past year, while LG Energy Solution increased by 84.9 percent, and Samsung SDI by 45.4 percent. The majority of these investments were directed towards facility installation, both domestically and internationally, and the expansion of production lines.
Industry insiders attribute the increased investment to a temporary downturn in electric vehicle demand, influenced by factors such as high interest rates and prices. Despite these challenges, the battery companies remain undeterred, emphasizing their unchanged long-term perspective on electric vehicles. Market research firm SNE Research recently reported a decrease in the growth rate of electric vehicles for the year, predicting a 30.6 percent growth, 5.8 percentage points lower than the previous forecast.
The strategic approach of the three major battery companies involves overcoming current challenges through continued investment and the introduction of new products. A key concern is China's concentrated entry into lithium iron phosphate (LFP) batteries, known for their lower energy density but lower cost compared to nickel-cobalt-manganese (NCM) batteries produced by the South Korean companies.
During recent performance briefings for the third quarter, LG Energy Solution officially announced its entry into the LFP batteries market, with plans for mass production by 2026. SK On, on the other hand, disclosed specific details about its completed development of LFP battery cells and ongoing discussions with a company for supply. The company is investing 1.5 trillion won and aims to build Battery Factory 3 in Seosan, South Chungcheong Province, with an annual target capacity of up to 14 gigawatt-hours (GWh) by 2025.
Samsung SDI is also in the game, revealing plans to develop LFP materials by 2026 and considering the construction of production facilities. The collective strategy of these major players revolves around innovation, adaptation, and sustained investment to navigate the evolving landscape of the electric vehicle market.