According to media reports, South Korea's three major battery companies-LG Energy Solution, Samsung SDI, and SK On-have recently released their financial results for the fourth quarter of 2024, revealing a combined loss of ₩800 billion (approximately RMB 4.03 billion). The figures highlight the prolonged downturn in the electric vehicle (EV) industry and its ongoing impact on the supply chain.
Data from SK Innovation shows that its battery subsidiary, SK On, posted a Q4 2024 loss of ₩359.4 billion, a staggering increase of nearly ₩340 billion from the ₩18.6 billion loss recorded in Q4 2023. This pushed SK On's total losses for 2024 to ₩1.127 trillion. LG Energy Solution and Samsung SDI also struggled, reporting Q4 losses of ₩225.5 billion and ₩256.7 billion, respectively. The two companies' combined annual losses increased by approximately ₩560 billion compared to the previous year.
The primary causes of these losses include sluggish EV sales in Europe, declining battery metal prices, and slowing global EV growth. Since the second half of 2023, EV demand in the U.S. and European markets has slowed significantly, leading to a sharp drop in battery manufacturers' capacity utilization rates. Data shows that in Q3 2024, LG Energy Solution's factory utilization rate fell to 60% (down 13 percentage points year-over-year), SK On's plummeted from 95% to a historic low of 46%, and Samsung SDI's small battery factory utilization rate declined by 9 percentage points to 68%.
Policy shifts in the U.S. have further intensified market concerns. After taking office in January 2025, the Trump administration immediately revoked the EV procurement mandates introduced under Biden and announced plans to cut EV subsidies. During LG Energy Solution's January 24 earnings call, the company acknowledged that the high level of policy uncertainty in North America has made automakers more cautious about their EV plans, directly impacting battery production schedules.
SK On has already postponed the planned launch of its Tennessee factory from 2025 to 2026 due to weak demand. Samsung SDI is currently negotiating with Stellantis to adjust the annual capacity plan for its first U.S. factory.
South Korean battery companies continue to lose global market share. In the first 10 months of 2024, LG Energy Solution, Samsung SDI, and SK On saw their combined market share drop from 31.7% in 2021 to 20.1%, while Chinese battery manufacturers expanded their share from 39.7% to 53.6% over the same period. Analysts point out that South Korean firms have lagged in adopting lithium iron phosphate (LFP) battery technology due to their over-reliance on nickel-based lithium-ion batteries. Additionally, their heavy dependence on Chinese supply chains has weakened both cost and technological competitiveness.
In response to the crisis, South Korean battery companies have implemented emergency management measures. Since July 2024, SK On has frozen executive salaries and conducted its first-ever voluntary layoffs. LG Energy Solution has strictly limited workforce expansion, while Samsung SDI has reshuffled its management team to drive strategic adjustments. Meanwhile, these companies are accelerating the development of 4680 large cylindrical batteries, LFP batteries, and sodium-ion batteries in an effort to diversify their product portfolios and regain competitiveness.
Additionally, LG Energy Solution, Samsung SDI, and SK On all plan to cut capital expenditures this year. LG Energy Solution announced that its investment budget for 2025 will be reduced by 20% to 30% compared to ₩13 trillion in 2024, meaning it may drop to around ₩10 trillion. SK On plans to slash its investment from ₩7.5 trillion to ₩3.5 trillion. Although Samsung SDI has not disclosed specific figures, the company confirmed that its 2025 spending will be lower than the ₩6.6 trillion invested last year.
Industry experts believe that a market rebound in 2025 is unlikely. Uncertainty in U.S. policies, competition from low-cost Chinese batteries, and sluggish EV demand growth will continue to pressure South Korean firms. If they fail to make breakthroughs in high-end technology or differentiated markets, South Korea's position in the global battery industry may weaken even further.
