Korean Enterprises Strengthen Power Battery Layout: SK And LG Plan To Invest More Than 80billion US Dollars

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On May 26, SK Group announced that it planned to invest 247trillion won (195.24 billion US dollars) in the next five years to develop semiconductor, battery, biopharmaceutical and other fields. As a Korean enterprise group second only to Samsung in volume, SK Group's subsidiaries include SK Hynix, the world's second largest memory chip manufacturer, SK on, the world's fifth largest power battery manufacturer, and so on.

SK group said it would invest 179trillion won in South Korea to help the country revive its economy. In addition, more than half of the investment will be used in the field of semiconductors and materials, with a capital scale of about 142.2 trillion won. In terms of power battery, hydrogen energy and other renewable energy businesses, SK Group will invest about 67.4 trillion won, mainly for the expansion of battery diaphragm plant and other projects.

Sk on, a battery company under SK group, previously announced that the number of power battery researchers of the company would double by the end of 2023. In 2021, SK on accounted for 5.6% of the global market share with 16.7gwh power battery installed capacity. Its main customers include Fuchs, Ford, Daimler, Hyundai Motor and Kia motor.

Data source: SNE research, a Korean market research institution

On the same day, LG Group announced that it planned to invest 106 trillion won (about US $83.7 billion) in key business areas by 2026, including power batteries, vehicle electronic systems, next-generation displays, artificial intelligence and biopharmaceuticals. As the fourth largest enterprise group in Korea, the subsidiaries of LG Group include LG Electronics, the world's largest household appliance manufacturer, and LG new energy, the world's second largest power battery manufacturer.

According to LG Group, the group has allocated 48trillion won, of which 21trillion won has been used for R & D in key business areas. LG Group plans to hire 50000 new employees in the next three years, including more than 3000 new employees in R & D fields such as artificial intelligence, software, big data, environmental protection materials and power batteries.

As LG Group has listed power batteries as one of the key areas of key investment, the relevant departments of the group's battery business will be vigorously developed. Foreign media reported that LG new energy will increase its investment in wucang factory in South Korea, while LG Chemical is considering potential mergers and acquisitions and joint ventures to enhance their competitiveness in the field of global electric vehicle battery materials.

LG new energy is a wholly-owned subsidiary of LG Chemical battery business in 2020. Since then, LG Chemical is still expanding its business in battery materials. In 2021, LG new energy accounted for 20.3% of the global market share with a power battery installed capacity of 60.2gwh. Its main customers include Tesla, general motors, Hyundai, Volkswagen, Renault, Volvo and other well-known car companies.

LG Group said that under the circumstance of increasing environmental uncertainty faced by enterprises, they decided to make bold investments to further enhance their global competitiveness and prepare for future sustainable development.

According to businesskorea, the three major battery manufacturers in South Korea, LG new energy, SK on and Samsung SDI, plan to build 11 power battery plants in the United States by the end of 2026, including 6 by LG new energy and 4 by SK on.

In addition to power batteries, LG new energy also aims at the rapidly growing energy storage system market. On May 24, LG New Energy announced that it would start mass production of standard size lithium iron phosphate (LFP) batteries from October 2023, expanding the shipments of lithium iron phosphate batteries from its Michigan battery plant in the United States.

At the European Electronics Exhibition held in Germany recently, LG new energy exhibited a new type of energy storage equipment equipped with lithium iron phosphate battery. According to insiders, LG new energy may mass produce lithium iron phosphate batteries in the United States in the future, so as to promote cooperation with Tesla.

With the acceleration of energy transformation in the world, energy storage system plays an increasingly important role in stabilizing the operation of power grid. According to the data of wood McKinsey, a global consulting firm, the size of the U.S. energy storage market in 2021 was $5.5 billion (about 36.63 billion yuan), a year-on-year increase of more than two times. LG new energy said that the energy storage system requires a large number of batteries, and the company plans to gain market competitiveness through lithium iron phosphate batteries which are cheaper than ternary batteries.

The lithium iron phosphate battery is a lithium-ion battery using lithium iron phosphate (LiFePO4) as the positive material and carbon as the negative material. Since lithium iron phosphate batteries do not contain nickel and cobalt, the supply of raw materials is more stable, which has a stronger cost advantage and environmental protection than ternary lithium batteries. Compared with ternary lithium battery, lithium iron phosphate battery has stronger safety and stability, longer cycle life, and only slightly inferior in energy density.

The characteristics of lithium iron phosphate battery make it the mainstream path of supporting batteries for energy storage system. It has a good application prospect in the fields of safe grid connection of renewable energy power stations, grid peak shaving, distributed power stations, UPS power supply, emergency power supply system and so on.

According to the analysis of the Research Report of CITIC Securities, in the future, benefiting from the rapid growth of the energy storage industry and the improvement of the penetration rate of lithium iron phosphate batteries in the overseas power field, it is expected that by 2025, lithium iron phosphate batteries will occupy 85% and 43% of the shares in the energy storage field and power battery field respectively.

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