Booming business for Chinese battery makers causes Korea’s global market share to fall

Posted on : 2022-08-03 17:06 KST Modified on : 2022-08-03 17:06 KST
The global market share of Korean battery companies fell from 34.9% to 25.8% for the first half of the year
Graphic by Go Yeong-suk
Graphic by Go Yeong-suk

While Chinese battery makers are becoming increasingly competitive thanks to the rapid growth of China’s domestic electric vehicle market, Korean battery companies are losing their once dominant share of the global market.

Chinese battery companies, which have grown and built up their technological expertise mainly within their home country, are now turning their gaze toward global markets. Some predict this could end up posing a threat to South Korea’s domestic battery industry.

According to findings reported by market research firm SNE Research on Tuesday, the total amount of battery energy installed in electric vehicles newly registered in 80 countries in the first six months of 2022 was 203.4 gigawatt-hours (GWh), up 76.8% compared to the same period last year.

China’s Contemporary Amperex Technology, or CATL, ranked first in the world in terms of battery energy supplied with 70.9 GWh while Korea’s LG Energy Solution came in second place with 29.2 GWh.

Although the two companies’ ranking has remained the same as last year, the gap in terms of energy supply has widened from the previous 5.6 GWh in the first half of 2021 to 41.7 GWh so far this year.

Also noteworthy is the rapid increase of CATL’s global electric vehicle battery market share, which has grown from 28.6% to 34.8%. On the other hand, LG Energy Solution saw its market share decline from 23.8% to 14.4%.

Besides CATL, other Chinese battery-making companies also saw significant growth. In fact, all six domestic Chinese battery manufacturers, which ranked in the global top 10 in terms of market share, recorded triple-digit growth.

South Korean companies, however, are neither growing as fast nor as much as their Chinese counterparts. Only SK On recorded a triple-digit growth with114.4% while LG Energy Solution and Samsung SDI grew by only 6.9% and 50.6%, respectively.

As a result, the global market share of these three South Korean battery companies fell from 34.9% in the first half of 2021 to 25.8% in the same period this year. What’s worse, even if one were to combine the shares of all three firms, they would still fall short of that of CATL.

“With China’s automobile market recovering after having contracted due to the COVID-19-related border blockade, [China’s] electric vehicle market has also grown faster compared to other countries,” an insider in the battery industry commented. As a result of this, the global market share of Chinese battery companies has increased significantly, the official said.

Having gained a competitive edge in the domestic market, concerns are growing regarding the possibility of Chinese battery manufacturers shifting their focus to North American and European markets — a move that could potentially negatively impact South Korean battery makers.

The main product made by Chinese battery manufacturers is the lithium iron phosphate (LFP) battery. Compared to the nickel, cobalt, and manganese (NCM) batteries that South Korean battery makers mainly manufacture, the energy storage density of LFP batteries is comparatively lower, meaning their cycle life is shorter. The trade-off is that LFP batteries are around 20% cheaper. As a result, LFP batteries are said to be suitable for low-end electric vehicles.

Because of this comparative advantage, American and European carmakers are actively expanding their use of Chinese LFP batteries. Tesla, for example, already uses LFP batteries in some Model 3 cars sold in the US while Ford has reportedly also decided to buy LFP batteries from CATL.

Direct investment in the US and Europe by Chinese companies is also set to continue.

CATL, for instance, has decided to invest US$5 billion to build a battery cell plant in North America capable of producing 80 GWh of batteries per year. China’s Guoxuan High-Tech, which currently ranks eighth in terms of global market share of electric vehicle batteries, is also planning on building its first overseas manufacturing plant by acquiring a Bosch plant in Germany.

“In the next five to 10 years, the supply of batteries will become insufficient compared to the demand,” says Kim Pil-soo, a professor of automotive engineering at Daelim University. “Since China’s battery technology has significantly developed and is now seen as stable, global automakers are diversifying their supply sources to ensure a stable supply of batteries.”

By Ahn Tae-ho, staff reporter

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