Rise of Chinese battery makers threatens LG Energy Solution’s top spot in global market

Posted on : 2023-06-12 17:00 KST Modified on : 2023-06-12 17:00 KST
Chinese battery makers have risen to a level of competitiveness beyond their domestic demand, securing supply lines to many of the world’s automakers
The president of CATL Europe unveils battery cells made at the plant in Erfurt, Thuringia, in central Germany, to the press in January. (Yonhap)
The president of CATL Europe unveils battery cells made at the plant in Erfurt, Thuringia, in central Germany, to the press in January. (Yonhap)

Chinese battery companies are continuing to grow at rapid rates despite US efforts to keep them in check. After dominating the Chinese market, these battery makers are rapidly gaining primacy in markets across the globe.

According to the Hankyoreh’s analysis of market research firm SNE Research’s latest report on the usage of batteries for electric vehicles (EVs, hybrids, and plug-in hybrids), LG Energy Solution and China’s Contemporary Amperex Technology (CATL) have been competing for the top spot in the global market (excluding China’s domestic market) since the beginning of 2023 through April.

LG Energy Solution installed 24.1 gigawatt hours (GWh) of batteries (market share of 27.8%), just ahead of CATL’s 23 GWh (26.5%), followed by Japan’s Panasonic (14.9 GWh, 17.2%), SK On (9.5 GWh, 10.9%), Samsung SDI (7.5 GWh, 8.7%), and BYD (1.4 GWh, 1%).

Even more noteworthy is the rapid growth of Chinese players in markets outside of China. In the first four months of this year, the usage of batteries made by CATL outside of China nearly doubled (97%) compared to the same period last year (11.7 GWh). BYD (0.2 to 1.4 GWh) and Farasis Energy (0.3 to 0.9 GWh) also saw usage increase sevenfold and threefold, respectively, over the same period.

The growth rate of Chinese battery companies far exceeds that of South Korean companies. LG Energy Solution (16.1 to 24.1 GWh) saw a 49.2% increase in usage, which is relatively large, but not comparable to Chinese companies.

SK On’s (9.0 to 9.5 GWh) usage growth was in the single digits (4.8%), and Samsung SDI’s (5.8 to 7.5 GWh) usage growth was 29.6%. This difference in growth rates means that the gap between South Korea and China in the global battery market could quickly widen.

“The reason that CATL managed to rank second place, even outside of China, is due to the strong sales of the Tesla Model 3, Volvo, and Peugeot products,” SNE Research analyzed.

This shows that the rapid growth of Chinese companies in the global battery market is not based on their reliance on their domestic market.

Chinese battery makers have risen to a level of competitiveness beyond their domestic demand, securing supply lines to many of the world’s automakers — threatening the South Korean players who were the first movers in the battery market.

”The size of the EV battery market continues to grow as the world’s major automakers are rapidly switching to EVs,” said an official from the South Korean battery industry, adding that, “Chinese companies have been focusing on domestic sales, but now they are increasingly winning orders from foreign companies in Europe and elsewhere.”

The difference in growth rates between Korean companies, which entered the global market first, and Chinese companies, which are just starting to enter the global market, means that the base effect is also playing a role.

Meanwhile, in terms of the global EV battery market, including China, CATL and BYD account for more than half (about 52%). This means that about half of the EVs registered in 80 countries around the world in the first four months of 2023 were equipped with Chinese batteries. The combined share of domestic companies such as LG Energy Solution is 23.4%.

By Choi Woo-ri, staff reporter

Please direct questions or comments to [english@hani.co.kr]

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