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Three Korean Battery Makers to Continue Massive Investment in 2020

The three major Korean electric vehicle (EV) battery manufacturers — LG Chem, Samsung SDI, and SK Innovation — invested a total of seven trillion won in production facilities in 2019. They are determined to continue to invest aggressively in 2020.

Last year, LG Chem invested 3.9 trillion won, more than twice its investment in the previous year. Samsung SDI also spent 1.59 trillion won, which was a bit smaller than its investment in 2018.

SK Innovation publicly discloses facility investments every two years. It invested 2.29 trillion won in facilities for the battery business in 2018 and 2019. Considering that the amount spent in the previous two years (2017-2018) was 879 billion won, the company’s investment in 2019 is estimated to have exceeded 1.5 trillion won,

The aggregate investment made by the three companies in 2019 represented an increase of 3 trillion won compared to 2018 (about 4 trillion) and the largest amount ever. Battery cells, like semiconductors, require large-scale facility investment.

The three Korean battery makers are expected to make large-scale investments in 2020. LG Chem has already announced that it plans to invest 3 trillion won in facilities this year. The company recently purchased a site in Poland to expand its battery plant. It plans to increase the Polish plant’s output from the current 100 GWh to 120 GWh by 2021, which can charge about 2.4 million EVs.

SK Innovation also has an order backlog worth 60 trillion won, and plans to increase battery production more than 10 times in two years to meet the orders. The company is investing in facility expansion in the United States and Europe.

Samsung SDI has not disclosed its order backlog specifically but its order volume is reportedly similar to or more than that of SK Innovation.

Korean battery makers had stayed at the top spot in the battery market until several years ago, but have been pushed back by their Chinese competitors backed by the Chinese government. Chinese competitors have waged a price war. According to market research firm SNE Research, the three Korean companies’ combined market share exceeded 40 percent for the first time in February. This was largely due to the contraction of the Chinese domestic market arising from the end of the electric vehicle subsidy policy in China.

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