Battery
Korea’s leading EV battery makers’ R&D spending hits record $1 bn in H1
By Aug 18, 2020 (Gmt+09:00)
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South Korea’s three leading electric-vehicle (EV) battery makers are investing heavily in EV research & development projects to gain ground in the fast-growing global rechargeable battery market.
According to regulatory filings on Tuesday, LG Chem Ltd, Samsung SDI Co. and SK Innovation Co. spent a combined 1.08 trillion won ($1 billion) in R&D projects in the first half of 2020, up 8.8% from the same period a year earlier. That marks the first time the EV battery trio’s R&D spending has exceeded 1 trillion won.
Among the three companies, LG Chem, the chemical arm of LG Group, spent the most with 543.4 billion won, although the amount was slightly less than the 544.9 billion won it spent in the same period last year.
SK Innovation’s R&D spending rose as much as 30.9% to 127.8 billion won from 97.6 billion won, while Samsung SDI spent 409.1 billion won during the first six months, up 16.9% from a year earlier.
“SK Innovation, a laggard in the EV battery market, is aggressively spending on EV battery technology to catch up with its bigger rivals,” said an industry official.
SK is particularly keen to upgrade its EV battery technology given its prolonged legal battle with LG Chem over rechargeable battery-making technology. The local battery rivals have been in legal wrangling since April 2019, after LG filed a pair of lawsuits with the US International Trade Commission (USITC) and a US court against SK for allegedly stealing battery technology through employee poaching. An ITC ruling is expected sometime in October.
BATTERY MAKERS COVETED BY INVESTORS
The EV battery trio have been the local stock market’s top picks, with their shares hitting fresh record highs on expectations of strong battery demand from automakers once the global economy recovers from the COVID-19 lockdown.
In the past couple of sessions, however, battery shares tumbled after Morgan Stanley downgraded them, saying their expected future revenue growth doesn’t justify current share valuations.
According to Tuesday’s regulatory filings, Samsung SDI led its rivals in terms of R&D spending in proportion to revenue, with a ratio of 8.2%, followed by LG Chem with 4% and SK Innovation at 0.7%.
Industry experts expect the rechargeable EV battery market to continue to grow in the coming years, forcing battery makers to increase their R&D spending to get the technological edge amid fierce competition.
Total global supply of EV batteries will exceed demand by 141 gigawatt-hours (GWh) by next year, but in 2023 the market will be as much as 140 GWh short in supply, according to market tracker SNE Research.
The Korean EV battery makers are facing competition with global rivals such as China’s CATL and Panasonic of Japan, who are developing next-generation batteries with active support from their governments.
AUTOMAKERS JOIN IN
Automakers are also joining in the race to produce rechargeable batteries.
Germany’s Bayerische Motoren Werke AG (BMW) spent 200 million euros (280 billion won) in the past four years to develop its own battery technology, while Japan’s Toyota Motor Corp. has invested 1.5 trillion yen (16 trillion won) in EV batteries.
“Korea, China and Japan -- the three global leaders in EV batteries – are competing head to head. Without a technology advantage over the others, any one can fall behind easily. That’s why they’re heavily raising R&D spending,” said Sohn Chang-woo, a senior researcher at the Korea International Trade Association.
Write to Jae-Kwang Ahn at ahnjk@hankyung.com
According to regulatory filings on Tuesday, LG Chem Ltd, Samsung SDI Co. and SK Innovation Co. spent a combined 1.08 trillion won ($1 billion) in R&D projects in the first half of 2020, up 8.8% from the same period a year earlier. That marks the first time the EV battery trio’s R&D spending has exceeded 1 trillion won.
Among the three companies, LG Chem, the chemical arm of LG Group, spent the most with 543.4 billion won, although the amount was slightly less than the 544.9 billion won it spent in the same period last year.
SK Innovation’s R&D spending rose as much as 30.9% to 127.8 billion won from 97.6 billion won, while Samsung SDI spent 409.1 billion won during the first six months, up 16.9% from a year earlier.
“SK Innovation, a laggard in the EV battery market, is aggressively spending on EV battery technology to catch up with its bigger rivals,” said an industry official.
SK is particularly keen to upgrade its EV battery technology given its prolonged legal battle with LG Chem over rechargeable battery-making technology. The local battery rivals have been in legal wrangling since April 2019, after LG filed a pair of lawsuits with the US International Trade Commission (USITC) and a US court against SK for allegedly stealing battery technology through employee poaching. An ITC ruling is expected sometime in October.
BATTERY MAKERS COVETED BY INVESTORS
The EV battery trio have been the local stock market’s top picks, with their shares hitting fresh record highs on expectations of strong battery demand from automakers once the global economy recovers from the COVID-19 lockdown.
In the past couple of sessions, however, battery shares tumbled after Morgan Stanley downgraded them, saying their expected future revenue growth doesn’t justify current share valuations.
According to Tuesday’s regulatory filings, Samsung SDI led its rivals in terms of R&D spending in proportion to revenue, with a ratio of 8.2%, followed by LG Chem with 4% and SK Innovation at 0.7%.
Industry experts expect the rechargeable EV battery market to continue to grow in the coming years, forcing battery makers to increase their R&D spending to get the technological edge amid fierce competition.
Total global supply of EV batteries will exceed demand by 141 gigawatt-hours (GWh) by next year, but in 2023 the market will be as much as 140 GWh short in supply, according to market tracker SNE Research.
The Korean EV battery makers are facing competition with global rivals such as China’s CATL and Panasonic of Japan, who are developing next-generation batteries with active support from their governments.
AUTOMAKERS JOIN IN
Automakers are also joining in the race to produce rechargeable batteries.
Germany’s Bayerische Motoren Werke AG (BMW) spent 200 million euros (280 billion won) in the past four years to develop its own battery technology, while Japan’s Toyota Motor Corp. has invested 1.5 trillion yen (16 trillion won) in EV batteries.
“Korea, China and Japan -- the three global leaders in EV batteries – are competing head to head. Without a technology advantage over the others, any one can fall behind easily. That’s why they’re heavily raising R&D spending,” said Sohn Chang-woo, a senior researcher at the Korea International Trade Association.
Write to Jae-Kwang Ahn at ahnjk@hankyung.com
In-Soo Nam edited this article
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