In recent years, the scale of South Korea's power batteries ranks second in the world; among the top 10 power battery companies in the world, South Korea occupies three, including LGES, SK On and Samsung SDI. However, the market share of the three Korean power battery companies has shown a downward trend year after year since 2020.
In response to fierce competition in the global power battery market and changes in the market structure brought about by European and American battery policies, South Korea has determined that battery technology is the core driving force for transforming the Korean economy into a leading economy. In addition, South Korean battery companies have stepped up cooperation with American auto companies, built factories in the United States to expand production capacity, accelerated self-production of materials, and actively developed low-cost and other battery technology to increase the share of Korean companies in the global market.
1. South Korean government battery industry strategic initiatives
Focusing on next-generation power battery technology, the South Korean government will promote public-private cooperation to support large-scale battery research and development. The South Korean government has planned the research and development route, mainly around the new generation of battery manufacturing technology and the commercialization of all-solid-state batteries, lithium-sulfur batteries, and lithium metal batteries. In order to obtain the next-generation auxiliary component technology for secondary batteries, the Korean government will promote the development of next-generation components, materials, and equipment technologies.
Develop next-generation original technologies (lithium metal-air batteries, multi-ion batteries, etc.), and promote the advancement of innovative technologies such as new concept batteries based on organic substances. In order to ensure South Korea's absolute competitiveness in lithium-ion battery technology, South Korea will achieve high-performance mileage and life of lithium-ion batteries by developing high-performance materials and improving the efficiency of low-carbon, digital, and intelligent manufacturing processes.
Although South Korea is a leader in power battery technology, South Korea's power batteries face the risk of unstable supply chains. In terms of supply chain, the key battery materials (cathodes, anodes, separators and electrolytes) and components required by South Korea’s lithium-ion batteries are highly dependent on imports from China and Japan, which together account for 70.2% of the global cathode market.
In the face of increasing competitive pressure and supply chain crisis, the Korean government and Korean battery companies urgently need a more stable, secure and diversified supply chain. To this end, the Korean government will build a Korean power battery production system by cultivating small and medium-sized core enterprises, cultivating secondary battery professionals, and formulating a system to respond to global competition and development trends.
2. South Korean battery companies step up cooperation with US auto companies
Although the market share of LGES, SK ON and Samsung SDI ranks among the top ten in the world in power battery installed capacity, the global market share of the three companies has continued to decline in recent years. Korean companies are seizing the opportunity to speed up the development of power batteries with higher energy density, and are actively investing in building factories in the United States. To diversify the supply of mineral raw materials needed for batteries and to respond to the New Deal in the US Companies such as Samsung SDI, SK On and LGES are leading a sea change in the production and assembly of battery materials.
The three major battery companies LGES, Samsung SDI and SK On have increased their close cooperation with American auto companies to accelerate the establishment of battery factories in the United States. By 2026, they are expected to jointly build 11 battery factories. Encouraged by this policy, South Korean battery companies have cooperated with American car companies to expand the investment scale of Korean companies to establish battery and battery material companies in the United States.
However, U.S. car companies require battery companies to share battery-related technologies on the grounds of ensuring battery safety, which also has an impact on Korean battery companies. In recent years, in order to protect the competitiveness of cutting-edge industries, the South Korean government has introduced a series of measures, deciding to identify major technologies with global competitiveness such as semiconductors and batteries as national core technologies to prevent the outflow of cutting-edge technologies.
3. South Korean battery companies accelerate material production
Under the economic downturn and the impact of the epidemic, the South Korean battery industry is facing a supply chain crisis brought about by rising global raw material prices. The external dependence of the four key materials of the Korean battery industry is: anode 47.2%, cathode 80.8%, separator 69.5%, and electrolyte 66.5%. Its dependence on important materials such as magnesium, rare earths, and lithium in China exceeds 80%, and its dependence on materials such as krypton, xenon, and palladium in Russia and Ukraine exceeds 30%.
In order to minimize its dependence on Chinese minerals and materials in the supply chain, South Korea has accelerated the layout of materials companies. In January 2022, LG Chem, the parent company of LGES, plans to set up a new power battery cathode material factory in South Korea, with an annual production scale of 60,000 tons. South Korea's three major battery companies are actively promoting the development of high-manganese batteries in order to reduce battery costs. High-manganese batteries are cheaper than existing ternary lithium batteries products, and have similar energy density.
The price is expected to be about 10% more expensive than lithium iron phosphate batteries, and their performance is ahead of lithium iron phosphate batteries. However, at present, manganese batteries are still in the product development stage, and the commercialization time cannot be guaranteed. However, South Korean battery companies rely mostly on Chinese companies for manganese and lithium, and more than 90% of manganese comes from China, which is also affected by raw materials.