Korean Battery Makers Face Threat from Chinese Counterparts in Electric Vehicle Market

Strategic Insights -

Korean battery makers are at risk of losing ground in the domestic electric vehicle (EV) market as Hyundai Motor Group's two car manufacturing units are increasingly relying on Chinese batteries. Kia, a sister carmaker of Hyundai Motor, is set to launch the EV5 in Korea using CATL's nickel-cobalt-manganese (NCM) batteries, marking a shift from BYD's lithium iron phosphate (LFP) batteries used in China. This decision reflects a broader trend, with Hyundai Motor also using CATL's NCM batteries in the Kona Electric. The reliance on Chinese batteries is driven by the need to cut costs amid decreasing subsidies for EVs and U.S. tariffs on car imports.

Key Takeaways:

  • Kia plans to launch the EV5 in Korea using CATL's NCM batteries, marking a shift from BYD's LFP batteries used in China.
  • Hyundai Motor has also used CATL's NCM batteries in the Kona Electric, increasing its reliance on Chinese batteries.
  • Kia has already used CATL's NCM batteries in the Niro EV and PV5, while its Ray EV runs on CATL's LFP batteries.
  • Hyundai Motor Group had traditionally used SK On's batteries for larger models, including the IONIQ 5 and IONIQ 9, but is now shifting to Chinese batteries.
  • Experts expect Chinese companies to continue threatening the position of Korean firms in the ternary battery market due to decreasing subsidies and U.S. tariffs.
  • Korean companies are responding by ramping up efforts to challenge China's dominance in the LFP battery market, with LG Energy Solution set to begin mass production of LFP batteries for EVs in late 2027.
  • SK On is reportedly considering producing LFP batteries for EVs at U.S. BlueOval SK plants, while Samsung SDI is in talks with GM about producing LFP batteries at the Indiana plant of their joint venture, Synergy Cells.

Statistics:

  • Hyundai Motor Group plans to use CATL's NCM batteries in the Kona Electric.
  • Kia has already used CATL's NCM batteries in the Niro EV and PV5.
  • LG Energy Solution is set to begin mass production of LFP batteries for EVs in late 2027.
  • SK On is reportedly considering producing LFP batteries for EVs at U.S. BlueOval SK plants.

Sources:

  • Industry officials, interview, Thursday.
  • "Kia to launch EV5 in Korea using CATL's NCM batteries", report, date not specified.
  • Hyundai Motor Group, product information, date not specified.
  • BYD, product information, date not specified.
  • CATL, product information, date not specified.
  • LG Energy Solution, press release, 2022.
  • SK On, press release, 2022.
  • Samsung SDI, press release, 2022.
  • GM, press release, 2022.