K-Battery Makers Gain as US Decides to Scrap Chinese-Made Batteries

The market expects battery sector earnings forecasts to rise rapidly, driven by a rebound in EV demand and the expansion of the energy storage system (ESS) market. This is analyzed as a result of improving global economic conditions coinciding with eco-friendly energy transition policies.

As a result, EV battery output is projected to rise to 101 and total battery output to 105, with the ESS battery market expected to grow sharply in the second half as the first-half constraints are overcome.

The plant is rehiring workers it had once laid off as it readies production. In addition, the joint-venture plant established by Hyundai Motor Group and LG Energy Solution is also set to enter full operation after October. The start-up of these major joint-venture plants is seen as a signal that the US EV market has bottomed out and is set for full-scale growth.

Under Korea's first Basic Plan for Renewable Energy, roughly 10GW of solar renewable energy must be installed each year. This translates into ESS (energy storage system) demand of about 20GWh per year. Demand is expected to surge to the point that the production lines of Korea's three major battery makers would fall short even if they ran at full capacity. This policy support is expected to act as a key driver of sustained growth for the domestic battery industry.

In the European market, regulations on Chinese-made batteries and EVs are tightening. As barriers such as the Industrial Acceleration Act and the Critical Raw Materials Act rise, Europe is actively seeking battery alternatives. Currently, apart from European-made batteries and Korean-made batteries, Europe has no realistic alternative. As local European battery makers struggle to mass-produce, Korean battery companies are likely to reap windfall gains.

Battery production is not a simple process that can be achieved overnight. Behind China's rapid battery industry growth was the large-scale inflow of Korean technical talent in the past, who passed on manufacturing know-how and basic technology. This was made possible because engineers from Samsung SDI and LG Energy Solution helped lay the foundation for battery production in China and transferred their skills locally. Simply equipping a factory with machinery makes it very difficult to produce high-quality batteries, and this is pointed to as the core reason behind the yield problems faced by European battery makers. It suggests that battery manufacturing is a field requiring advanced technological capability and long experience, which is hard to acquire in a short period.