Korea to compete with China's CATL in cheap EV battery battle

Industry

Published: 07 Mar. 2023, 18:12

Korea to compete with China's CATL in cheap EV battery battle

SK On's battery research center in Daejeon [SK ON]

With battery technology prevalent in China making forays into the U.S. automotive market, Korean battery makers are scrambling to offer cheaper electric vehicle batteries, a market currently dominated by China’s CATL.

Companies like SK On and LG Energy Solution are throwing their hats into the ring as big names like Tesla and Ford Motor are expanding their use of lithium iron phosphate, or LFP, batteries to pursue low-cost and safety.

Previously, they were highly dependent on nickel, manganese and cobalt (NCM) batteries, a sector in which Korean makers hold firmer standing.

SK On, a subsidiary of SK Innovation and supplier of Ford, said Tuesday it will exhibit its pilot LFP battery product at the InterBattery 2023 exhibition scheduled to kick off on March 15 at COEX, southern Seoul.

It will be the first battery company in Korea to publicize domestically-developed LFP batteries.

SK On’s pouch-type LFP batteries are known to have improved the major disadvantage of LFPs which is that the capacity reduces by 70 percent at freezing temperatures around minus 20 degrees Celsius.

The Korean battery maker has been developing LFP batteries since 2021 at its research center in Daejeon. When it can start mass production has not been disclosed.

Compared to today’s NCM batteries, LFP batteries have less energy density but cost 30 percent less.

LFP batteries have fewer risks related to fire as they do not contain nickel. Around 95 percent of the LFP battery market is controlled by Chinese manufacturers including CATL.

SK On’s entry into the LFP battery market comes as Ford Motor announced a technology licensing deal with CATL for LFP batteries for its new $3.5 billion battery plant in Michigan, citing the need to offer customers a lower-priced option.

Ford said its Mustang Mach-Es, the most popular EV from the brand, will begin using LFP batteries starting this year, followed by the F-150 Lightning trucks in 2024.

Tesla has been at the forefront of bringing LFP technology to the U.S. market. It already uses LFP batteries in its Model 3 and Model Y vehicles, not only those sold in China but also in the U.S. market.

Mercedes-Benz also said it would use LFP batteries for future entry-level EV models. Others including Stellantis and Volkswagen are also reviewing usage.

“As countries will continually reduce subsidies, automakers will likely expand lineups for low-cost EVs,” said Yim Eun-young, a researcher at Samsung Securities.

“Demand for LFP batteries will grow, so Korean companies must accelerate the development or even other cheaper batteries that can compete with LFP.”

LG Energy Solution plans to shift its Nanjing plant to an LFP battery-dedicated facility this year.

It will build a new LFP facility at its plant in Holland, Michigan.

Samsung SDI is instead betting big on the so-called “high-manganese battery,” which refers to batteries made with about 70 percent less nickel and cobalt, the two most expensive raw materials.

LFP batteries accounted for about 27.2 percent of the battery capacity of EVs sold worldwide last year, compared to 5.5 percent in 2020, according to data from market tracker EV-volumes.

The share for NCM batteries fell to 61.3 percent from 71.5 percent during the same period.

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