November 29, 2024

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(123rf)

South Korean battery giants -- LG Energy Solutions, Samsung SDI and SK On -- are expected to see a combined sales of some 50 trillion won ($39 billion), marking a record-breaking year amid burgeoning demand for electric vehicles overseas.

LG Energy Solutions’ revenue this year is estimated to surge on-year by 41.4 percent to 25.2 trillion won, according to data from market tracker FnGuide. Net profit would skyrocket 95.3 percent to 1.5 trillion won, surpassing the 1 trillion won mark for the first time.

Samsung SDI’s revenue and net profit are estimated at 20.1 trillion won and 1.9 trillion won, up by 48.5 percent and 81.1 percent compared to a year earlier. SK On is expected to log 6 trillion won in revenue, turning a profit since its split-off from SK Innovation last year.

The three companies’ stellar performance in the fast-growing EV market comes as the global manufacturing industry is going downhill, experts said.

Of the total 219,489 car exports in November, eco-friendly car exports came to 50,042 units, a 14.8 percent increase from the previous year, data from the Ministry of Trade, Industry and Energy showed.

In particular, the EV export volume posted a record high of 22,341 units, accounting for 22.8 percent of the green-energy cars.

Industry watchers say battery makers here will continue to boost their business by going all-out in setting up production facilities and joint ventures -- especially in the US, one of the leading markets and global hubs for EVs.

“Despite huge costs, companies are trying to take EV hegemony by investing in the strategic hubs like the US. Producing EVs there is the easiest way to expand footing in South America and Mexico as well,” said Park Cheol-wan, a car engineering professor at Seojeong University.

“Also, since US is pushing its Inflation Reduction Act, we have no choice but to take initiative of reducing dependence on China.” The IRA, part of Washington's push for a revival in domestic manufacturing, requires EV batteries and other key cleantech products to be produced in the US.

LG Energy Solutions is already operating the first plant in Ohio through Ultium Cells, a joint venture with General Motors, and is building the second and third plant in Tennessee and Michigan. It has recently secured a $2.5 billion loan from the US Department of Energy to finance the construction of those facilities. The company also plans to build joint factories with Stellantis in Canada and Honda in the US.

Samsung SDI has kept a relatively low profile on expansion plans of its production lines abroad. But speculation arose after the passage of the IRA that the battery maker is in talks with Ford Motor or GM to establish a joint venture. Under a $2.5 billion investment with Stellantis, the company is poised to build a joint battery plant in Indiana by early 2025.

An industry latecomer compared to the other two players, SK On is aggressively investing in global production facilities. It announced Wednesday it will raise 2.8 trillion won from its parent company and local private equity funds for business expansion.

It will construct a second battery plant in Georgia by 2025 under a partnership with Hyundai Motors. The company is also planning to start operations at three production facilities in Kentucky and Tennessee through BlueOval SK, a joint venture with Ford Motor, by early next year.

By Byun Hye-jin (hyejin2@heraldcorp.com)