The recent merger between Japanese automakers Nissan and Honda has brought to light the increasing competition from Chinese-made electric vehicles. However, there is another pressing issue that is plaguing the industry – the declining global demand for EVs.
Reports from Business Korea indicate that South Korea’s leading battery manufacturers, including LG Energy Solution, Samsung SDI, and SK On, are facing challenges as their factory utilization rates have significantly dropped in recent months. LG Energy Solution saw a decrease in its utilization rate from 73% to 60% in the third quarter of 2024 compared to the same period in 2023. Similarly, SK On experienced a drastic drop from 95% to 46%, while Samsung SDI’s utilization rate for small batteries decreased by 9 percentage points to 68%.
The decrease in factory utilization rates can be attributed to the sluggish recovery in EV demand, leading to reduced production volumes at battery facilities. Despite U.S. EV giant Tesla’s 6% increase in global vehicle deliveries in the third quarter of 2024 compared to the previous year, its year-to-date deliveries actually dropped by 2% in the first nine months of the same year.
In response to these challenges, the battery industry has implemented emergency measures. SK On has frozen executive salaries and introduced a voluntary retirement program, while LG Energy Solution has limited workforce expansion. Samsung SDI has also undergone a management shake-up with the appointment of Choi Joo-sun, formerly of Samsung Display, as its new leader.
Moreover, the industry is facing additional uncertainty due to the potential elimination of EV subsidies by the Trump administration. To adapt to these changes, battery companies are focusing on developing next-generation products like the 46-Pi mm-diameter cylindrical batteries to secure future opportunities.
As the industry grapples with these challenges, it is essential for manufacturers to innovate and adapt to the changing landscape of the global EV market. By staying ahead of the curve and investing in cutting-edge technologies, battery companies can position themselves for long-term success in the evolving electric vehicle industry.
