LG, Samsung, SK enhance battery presence with global automakers

LG Energy Solution's battery manufacturing facility in Poland / Courtesy of LG Energy Solution

Three major Korean battery manufacturers are strengthening their global lead in manufacturing batteries for electric vehicles (EV), with their combined orders backlog soaring to 1,000 trillion won ($741 billion).

As most renowned automakers are rapidly reshaping their growth strategy by focusing on EVs, the figure is forecast to surge further from a longer-term perspective.

According to LG Energy Solution, the nation’s largest battery manufacturer by market capitalization, its official backlog of battery orders already topped 470 trillion won following its latest contract to supply battery modules to Toyota Motor.

Samsung SDI is also estimated to have received 260 trillion won worth of orders, with SK On nearing 300 trillion won so far this year.

The achievement has been made possible as the major battery firms have secured a technological edge as first movers in the lucrative EV battery market.

Growing demand for EV batteries from automakers here and abroad will help the battery firms continue to generate solid earnings growth for years to come.

Local brokerage houses estimate LG Energy Solution has chalked around 8.4 trillion won in sales between July and September, up 9.6 percent from the previous year.

The LG affiliate is also expected to have generated an operating profit of 640 billion won during the same period, up more than 22 percent from a year earlier. This falls short of earlier market consensus of around 700 billion won. Shares of LG Energy Solution fell sharply for the past month on the somewhat weaker-than-expected revenue outlook in the third quarter.

Sales of Samsung SDI come in second with more than 6 trillion won, up 12.47 percent during the same period.

Even with the global EV industry recently showing signs of slowed growth, market analysts remain optimistic for battery firms’ gradual earnings recovery in the fourth quarter.

“Shares of LG Energy Solution experienced a fall of around 23 percent from its annual high in 2023, hit by seasonal factors, but the company’s core strength as the biggest beneficiary in the U.S. EV industry has never been tarnished,” said Cho Chul-hee, an analyst at the Korea Investment & Securities. “It looks hard for the firm’s stock value to surge in a short period of time, but we maintain its target stock value at 850,000 won per share.”