The Korean battery industry is facing a crisis as the nation's three major players, LG Energy Solution, Samsung SDI, and SK On, all reported losses in the fourth quarter of last year. This marks the first time all three have simultaneously recorded losses in a quarter, raising concerns about the sector's future.
However, the industry is eyeing the North American market as a potential lifeline. Despite global uncertainties, the North American electric vehicle (EV) market continues to grow, offering a glimmer of hope for a rebound.
LG Energy Solution, the first of the three to announce earnings, reported an operating loss of 225.5 billion won ($170 million USD) in Q4 2024, its first quarterly loss in three years. Samsung SDI also swung to a loss of 256.7 billion won ($193 million USD) from a profit of 295.3 billion won ($222 million USD) the same period last year. SK On, which had briefly returned to profitability in Q3, slipped back into the red with an operating loss of 359.4 billion won ($270 million USD) on sales of 1.59 trillion won ($1.2 billion USD).
Despite the gloomy figures, there are some positive signs. SK On saw its Advanced Manufacturing Production Credit (AMPC) benefits increase by 34% to 81.3 billion won ($61 million USD), indicating that increased sales in North America are translating into higher profits. Samsung SDI also saw a 142% jump in AMPC benefits to 24.9 billion won ($18 million USD).
LG Energy Solution is also making moves to capitalize on the North American market, recently announcing a 800 billion won ($600 million USD) corporate bond issuance to fund investments in the region.
In an earnings call, LG Energy Solution expressed optimism about the future, citing upcoming EV launches by OEMs, new joint ventures with Stellantis and Honda, and growing demand for localized energy storage systems (ESS) as major opportunities.
Analysts believe that the North American EV market will be key to the battery industry's recovery.
"We expect SK On's battery division to bottom out in the first quarter and improve from the second half of the year," said Lee Dong-wook, an analyst at IBK Investment & Securities. "Joint ventures with major OEMs such as Hyundai and Ford will begin operations, and AMPC benefits are expected to increase as North American customers expand new models."
Choi Bo-young, an analyst at Kyobo Securities, also expects Samsung SDI to see improvements, "We anticipate quarterly improvements due to increased AMPC from rising production at new North American lines and the peak season effect for ESS."
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