Despite the ongoing electric vehicle demand slowdown (chasm), South Korea’s three major battery makers invested more than 4 trillion won in new production facilities, capacity expansions, and equipment upgrades during the first half of this year. At the same time, a bidding war worth approximately 1 trillion won is reigniting ahead of the third Energy Storage System (ESS) Central Contract Market auction, which is expected to be announced between mid-August and September.<\/p>\n
According to semi-annual reports filed by LG Energy Solution (373220.KS), Samsung SDI (006400.KS), and SK On on August 18, the three companies continued to invest primarily in production capacity expansion during the first half.<\/p>\n
LG Energy Solution invested 2.69 trillion won (approximately $1.9 billion) in its secondary battery division in the first half. The investment was directed toward new construction, expansion, and upgrades, with funds allocated to new and expanded production facilities including buildings and equipment. The company cited increased production capacity as the investment outcome, stating, “We will continue to execute appropriate investments aligned with business environment and market changes to strengthen our business competitiveness going forward.”<\/p>\n
Samsung SDI invested 1.08 trillion won (approximately $763.1 million) in its energy solutions division during the same period. Including 11.9 billion won (approximately $8.4 million) in its electronic materials division, total investment reached 1.09 trillion won (approximately $771.5 million), with energy solutions\u2014the battery business\u2014accounting for the overwhelming majority. Samsung SDI’s energy solutions investment also focused on new construction, expansion, and upgrades of buildings and equipment. Last month, the company unveiled a mid-to-long-term plan to invest a total of 9 trillion won (approximately $6.4 billion) by 2040 in a mother line for next-generation battery technology validation and advanced R&D.<\/p>\n
SK On executed 578.9 billion won (approximately $408.7 million) in new construction and expansion for its battery and materials business in the first half. The amount includes domestic and overseas battery facilities as well as new and expanded commercial lines for lithium-ion battery separators (LiBS). However, SK On’s investment figure includes LiBS materials business investments in addition to battery production facilities, so the scope differs from the battery investment figures of LG Energy Solution and Samsung SDI.<\/p>\n
The three companies’ first-half capital expenditure is summarized below:<\/p>\n
CompanyInvestment DivisionH1 InvestmentLG Energy SolutionSecondary batteries\u20a92.69 trillionSamsung SDIEnergy solutions\u20a91.08 trillionSK OnBattery & materials\u20a9578.9 billion<\/p>\n
Note: SK On’s investment figure includes LiBS materials business investments, so the scope differs.<\/p>\n
These investments are centered on major production hubs in North America, Europe, and China. LG Energy Solution has established production bases in Michigan, Ohio, Arizona, and Georgia in the United States, as well as Ontario, Canada, and is also investing in the construction of a new plant in Arizona. Samsung SDI is expanding its North American production footprint through StarPlus Energy in Kokomo, Indiana, and joint ventures with GM. SK On operates production facilities in Georgia, Hungary, and China, and plans to secure annual production capacity of more than 179 GWh by the end of this year by gradually ramping up its third plant in Hungary and third plant in Yancheng, China.<\/p>\n
Third ESS Auction Reignites \u20a91 Trillion Bidding War<\/p>\n
The rapid growth of the ESS market underpins the battery makers’ continued facility investments despite the challenging business environment. ESS has emerged as a core business to offset declining factory utilization rates caused by weakening EV battery demand and to secure new revenue streams.<\/p>\n
South Korea’s Korea Power Exchange is expected to announce the third ESS Central Contract Market auction between mid-August and September. The project scale is estimated at approximately 1 trillion won (approximately $706 million). In the previous two auctions, Samsung SDI and SK On showed strength. Samsung SDI secured approximately 76% of total volume in the first auction, while SK On captured around 50% in the second, winning the largest share.<\/p>\n
In the second auction, the weighting between price and non-price evaluation was adjusted from the previous 60:40 to 50:50, increasing the importance of contribution to domestic industrial competitiveness. A similar evaluation approach is expected for the third auction, meaning domestic production and supply chains, safety, and technology\u2014not just price\u2014will determine order winners.<\/p>\n
Accordingly, the three battery makers are accelerating efforts to strengthen their domestic production bases. LG Energy Solution is building an ESS-dedicated lithium iron phosphate (LFP) battery production line in Ochang, North Chungcheong Province, and testing products from domestic materials suppliers to shore up its domestic production and supply chain, which had been identified as a weakness. SK On is producing ESS-dedicated LFP batteries at its Seosan plant in South Chungcheong Province and using LFP cathode materials from L&F, expanding domestic production and materials localization. Samsung SDI is expected to defend its position by leveraging its existing domestic production base, safety record, and technology.<\/p>\n
In fact, all three battery makers posted profits in the second quarter of this year. It marked the first time in seven quarters that all three companies were profitable simultaneously, with strong ESS business performance centered on North America driving the improvement.<\/p>\n
North American ESS Market Expands Opportunities for K-Battery<\/p>\n
Domestic order wins could serve as important references for future expansion into North American and European markets. With the United States raising tariffs on Chinese-made non-EV lithium-ion batteries, new opportunities are opening for Korean battery makers, and all three companies are strengthening their North American ESS businesses.<\/p>\n
In their semi-annual reports, all three companies commonly cited ESS as a future growth area. Samsung SDI and SK On identified robot batteries as next-generation businesses, while LG Energy Solution and Samsung SDI each presented solid-state batteries as next-generation technology. LG Energy Solution produces batteries for EVs, ESS, and IT devices while expanding into ESS system integration. The company plans to expand its presence in the global ESS market based on its capabilities in large-scale ESS deployment and system integration (SI).<\/p>\n
Samsung SDI is also developing next-generation technologies including solid-state and sodium batteries. In the first half of this year, the company pursued key R&D projects including high-output ESS modules for uninterruptible power supplies (UPS) and low-cost, high-safety ESS cells.<\/p>\n
Market share figures were also partially disclosed. LG Energy Solution reported a global EV battery market share of 8.6% in the first half, while Samsung SDI reported a small-format battery market share of 12%.<\/p>\n
An industry source said, “ESS is a critical market where battery makers can secure new demand,” adding, “Order track records and experience accumulated in the domestic market can serve as competitive advantages for expanding into overseas ESS markets going forward.”<\/p>\n","protected":false},"excerpt":{"rendered":"Despite the ongoing electric vehicle demand slowdown (chasm), South Korea’s three major battery makers invested more than 4…\n","protected":false},"author":2,"featured_media":122683,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[26],"tags":[4305,45461,760,36304,315,747,733,63558,43475,753,4302],"class_list":["post-122682","post","type-post","status-publish","format-standard","has-post-thumbnail","category-lg-energy-solution","tag-energy-storage-systems-ess","tag-ess-central-contract-market","tag-ev-chasm","tag-korea-power-exchange","tag-lg","tag-lg-energy","tag-lg-energy-solution","tag-lithium-iron-phosphate-lfp-batteries","tag-north-american-ess-market","tag-samsung-sdi","tag-sk-on"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/122682","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/comments?post=122682"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/posts\/122682\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media\/122683"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/media?parent=122682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/categories?post=122682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/korea\/wp-json\/wp\/v2\/tags?post=122682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}