China's battery materials sector is thriving, backed by government subsidies, low electricity costs, and cheaper labor, enabling aggressive investment. In contrast, South Korean firms, lacking comparable support, are struggling with mounting losses and potential market exits, threatening the stability of South Korea's EV supply chain.
KED Global reports that Posco Future M, South Korea's only anode material producer, has seen its utilization rate plummet below 30%, with daily lows of just 10%. If the company exits the market, South Korea will lose its sole domestic supplier of anode materials.
Across the four core battery materials—cathodes, anodes, separators, and electrolytes—seven South Korean companies reported losses, while Chinese firms remained overwhelmingly profitable.
South Korean EV battery market share falls to 23.4% in 3Q24
Yonhap News reports that South Korea's top three EV battery manufacturers saw their global market share fall 2.7pp quarter-over-quarter to 23.4% in the third quarter of 2024.
According to SNE Research, global EV battery installed capacity reached 258.5 GWh as of December 2. South Korea's top three battery makers held a 23.4% market share, led by LG Energy Solution (LGES) with 14.1% (down 0.6pp), ranking second globally. Samsung SDI and SK On followed with 5.7% and 3.6%, ranking fourth and fifth, respectively. China's CATL dominated with 28.5%, while BYD's FinDreams ranked third at 12.3%.
South Korea's top three battery makers held 17.2% of global installed capacity in the third quarter of 2024, down from 25.3% in the first quarter and 19.9% in the second quarter. LGES ranked third with 11.2%, followed by Samsung SDI at 3.2% (seventh) and SK On at 2.9% (eighth). Chinese firms dominated with 52.2%, led by CATL at 35.2% and BYD at 17%.
Source: SNE Research, compiled by DIGITIMES, December 2024
Profit and loss snapshot: Chinese vs. South Korean battery players
Posco Future M's anode materials division is projected to lose approximately US$2.72–2.79 million in the third quarter of 2024, while China's Shanshan Group and Btr New Material Group posted profits of US$47.82 million and US$47.68 million, respectively.
In the electrolyte sector, South Korea's Enchem reported a US$4.95 million loss, while China's Tinci Materials posted a profit of US$31.79 million.
In separators, SKIET posted a US$50.89 million loss in the third quarter of 2024 and is projected to lose US$195.54 million for the year, with SK Group unable to find buyers for the company. Fellow South Korean separator maker WCP reported a US$13.52 million loss, while China's Innovation New Material posted a profit of US$50.33 million.
South Korea's cathode material makers face mounting challenges. EcoPro BM and L&F posted third-quarter losses of US$28.72 million and US$50.47 million, respectively, while Posco Future M's cathode division lost US$8.37 million. In contrast, China's Ningbo Ronbay, Hunan Yuneng, and Beijing Easpring reported profits of US$33.95 million, US$27.12 million, and US$25.72 million, respectively.
Cathode materials: Lotte targets China's lead with LFP production
The Elec reports that Lotte Energy Materials will complete its LFP cathode pilot line in Iksan, North Jeolla Province, by December 2024. Mass production, starting at 1,000 tons per year, is set for the first quarter of 2025, with plans to gradually increase utilization.
Lotte Energy Materials is ramping up LFP cathode production by repurposing NCM cathode lines and converting legacy LMO facilities inherited from its Iljin Materials era.
Currently, LGES, Samsung SDI, and SK On have all initiated the commercialization of LFP batteries, with LGES and Samsung SDI being particularly proactive.
In July 2024, LGES secured a 39 GWh LFP battery deal with Renault, enough for 590,000 EVs, and supplied an 8 GWh energy storage system (ESS) to US renewable firm Terra-Gen LLC.
Samsung SDI is investing KRW1 trillion (approx. US$697.12 million) to build an LFP battery line and a dedicated ESS production line at its Ulsan plant, including a cathode material facility.
South Korea's push to break China's grip on LFP battery supply chain
Under pressure from Chinese competition, South Korean battery makers increasingly rely on Chinese materials, which are 20–30% cheaper. Except for high-end NCM components, most supply chains now depend heavily on China.
Producing LFP batteries depends on Chinese imports of cathode materials, lithium carbonate (Li2CO3), and lithium hexafluorophosphate (LiPF6), maintaining South Korea's reliance on China.
With large-scale investment, Lotte Energy Materials could establish a robust LFP cathode supply system by 2026, diversify its revenue, and reduce reliance on copper foil while expanding into solid-state and silicon anode materials.
LFP batteries, made from lithium, phosphorus, and iron, are cheaper but less energy-dense than NCM batteries, which require nickel, cobalt, manganese, and aluminum. Chinese firms currently dominate the market.
Since 2023, South Korea has committed KRW23 billion over four years, including KRW16 billion in support, to develop LFP batteries. Progress by Lotte Energy Materials could enhance South Korea's competitiveness and challenge China's dominance in the global LFP market.
Policy gaps undermine South Korea's battery material competitiveness
China's price advantage in battery materials stems from nearly US$700 million in subsidies, tax breaks, low-interest loans, and land incentives. By contrast, South Korean firms face 60–70% higher electricity costs and far greater labor expenses, with little policy support.
Batteries, seen as the next pivotal industry after semiconductors, could face severe disruption if China gains full control over key materials. Experts urge the South Korean government to provide targeted support, including production subsidies, local procurement incentives, and investment tax breaks.
