Is Korea's Battery Industry Ready for Another Leap?
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Is Korea's Battery Industry Ready for Another Leap?

Investors interested in the technology of electric vehicles and the potential investment opportunities associated with them may benefit from a review of Korea's leading battery manufacturers. The battery cells produced by Korea's Top 3 manufacturers have advanced battery density/cost efficiency/flexibility in new form factors. They also have made preemptive efforts on vertical integration in crucial minerals/battery materials sourcing for cost control, are well-prepared in battery capacity, and have strong relationships with US-based Original Equipment Manufacturers (OEM). The US Inflation Reduction Act (IRA) could positively impact Korean battery cell producers through subsidies/credits, but there are still uncertainties about the bill.

Key beneficiaries of non-China xEV battery demand growth in non-China regions (mainly the US/EU) could outpace that of China due to significant eco-friendly policy initiatives (i.e., US Inflation Reduction Act (IRA)), more BEV model launches from broad-based international OEMs and relatively low xEV penetration, particularly for North America (vs. China). Of note, Plug-In Electric Hybrid Vehicles (PHEV) + Battery Electric Vehicles (BEV) penetration in North America is estimated only at ~7% in 2022 (annual-avg.), whereas it is tracking ~25% in China.

Accelerating xEV penetration in North America also matters for average battery density/vehicle and higher power/longer driving distance requirements (i.e., rising large-size SUV sales mix). In this regard, Korea’s Top 3 battery cell makers could be poised to capture growth opportunities given (1) advanced technologies (high battery density/cost efficiency/flexibility in form factor) with accumulated know-how in chemistry/manufacturing processes; (2) well-prepared battery capacities, particularly in the US; order visibility is high from US-based OEMs; (3) preemptive efforts on vertical integration in critical minerals/battery materials sourcing to cost control better.

@Sang Uk Kim