Korean battery makers losing power on global EV sales slump

Korea's big three in battery-making are all expected to report underwhelming first quarters as global EV makers recalibrate their sales expectations.

Visitors to InterBattery 2024 take a look at SK On's batteries at Coex in southern Seoul in March. [YONHAP]

Korean battery heavyweights are suffering from shrinking orders as global automakers put the brakes on EV production amid slowing demand.

The country's battery exports came in at $1.97 billion in the first quarter, down 22.3 percent on year, according to data from the Ministry of Trade, Industry and Energy, continuing the downturn into a third consecutive month.

LG Energy Solution, the country’s largest battery maker, posted an operating loss of 31.6 billion won ($23 million) in the first quarter, excluding EV tax credits from the U.S. government, according to its latest preliminary earnings guidance. The company said it reflected tax credits worth 188.9 billion won under the Inflation Reduction Act.

It is the first loss since the company spun off from LG Chem in the third quarter of 2021.

Ultium Cells employees work at its battery manufacturing plant in Lordstown, Ohio. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]

SK On, a battery-making subsidiary under SK Innovation, is not expected to turn to profit in the first quarter as sales of Hyundai Motor’s Ioniq 5 and EV6 fell. Hyundai is one of the firm's major clients.

A result in the red would be the ninth consecutive quarter of operating loss.

“We expect SK On to post an operating loss of 376.5 billion won in the first quarter,” said Cho Hyun-ryul, senior researcher at Samsung Securities. “The company’s average sales price likely slid an additional 10 percent while shipments shrank 21 percent as North American and European clients faced slower growth in demand.”

Samsung SDI’s operating profit is estimated to have plunged 35 percent to 244.2 billion won in the first quarter, while revenue fell 2.7 percent to 5.2 trillion won, according to market tracker FnGuide.

The combined global market share of the three largest battery makers stood at 23.8 percent this year through the end of February, down 1.2 percentage points compared to the same period a year earlier.

The weak performance comes as global automakers overhaul their EV production and investment amid slumping demand.

Kia recently revised its EV sales goal to 1.14 million units by 2027. The automaker initially said it will reach the 1 million-unit level by 2026.

“We expect EV market growth will slow down until 2026,” Kia CEO Song Ho-sung said during a recent event for its investors. “Kia will expand its hybrid lineups [in response to the market conditions.]”

Ford recently said it has delayed the planned launch of a three-row SUV at a plant in Canada to 2027 from its initial target of 2025.

A next-generation pickup, code-named the T3, is also being pushed back from late 2025 to 2026. Production of the pickups is planned for Ford's plant in Tennessee, which is a joint venture with SK On.

General Motors likewise has announced a one-year delay in the production of its electric pickup trucks at its Michigan plant.

Volkswagen postponed its fourth battery factory indefinitely, which was about to be built in Europe, while Mercedes-Benz decided to delay its electrification goal by five years.

Tesla last week said it delivered 386,810 EVs in the first quarter, down 8.5 percent on year and the first time in two years that carmaker's quarterly sales dropped below 400,000.

BY SARAH CHEA [chea.sarah@joongang.co.kr]