LG Energy Solution and Samsung SDI are boosting R&D and North American ESS plans while SK On is cutting costs while shifting plants toward LFP and battery storage
LG Energy Solution and Samsung SDI ‘ expand R&D’ while SK On focus ‘internal management.’
The three major domestic battery companies are showing differences in their investment strategies to secure future competitiveness amidst the crisis of the electric vehicle (EV) chasm (temporary demand stagnation).
While LG Energy Solution and Samsung SDI have expanded research and development (R&D) investments and financial support to preempt the North American ESS (Energy Storage System) market, SK On appears to be focusing on defending profitability through financial burden management and portfolio rebalancing.
According to the quarterly reports of each company on May 19, LG Energy Solution’s research and development expenses for the first quarter of this year amounted to 340.3 billion won (approximately $226.8 million), an increase of 10.7% compared to the same period last year.
In particular, it significantly increased the credit limit for payment guarantees to overseas subsidiaries from the 6 trillion won range at the end of the first quarter of last year to 9.65 trillion won at the end of the first quarter of this year.
This is interpreted as an effort to secure an ESS production base in the North American region.
In fact, LG Energy Solution has currently secured a cumulative order backlog of more than 140GWh, and has set its new order target for this year at over 90GWh, which is an all-time high.
To achieve this, the company plans to secure an ESS production capacity of 50GWh in North America by converting parts of the Lansing plant and the Honda JV line to ESS use, in addition to the Holland plant in Michigan.
Samsung SDI recorded the highest R&D increase rate (21.8%) among the three battery companies, accelerating its ‘technology-centric management’.
By executing 435 billion won in research and development expenses in the first quarter of this year, the company is spurring the development of next-generation products such as all-solid-state batteries (mass production in 2027).
Financially, it is enhancing local production capabilities by providing a payment guarantee of approximately $3.9 billion to its subsidiaries in Hungary and the United States (such as StarPlus Energy).
Samsung SDI has set a goal this year to grow its ESS sales, which were previously in the 3 trillion won range, by more than 50% compared to the previous year.
To this end, the company is directly targeting the artificial intelligence (AI) data center and North American power grid markets with high-value-added product lines such as the ‘Samsung Battery Box (SBB) 1.7’ with increased energy density and the lithium iron phosphate (LFP)-based ‘SBB 2.0’.
Particularly, to secure resources for continuous capital expenditures (CAPEX), the company is seeking financial stability by even reviewing the sale of its stake in Samsung Display.
Showing a relatively conservative trend, SK On has embarked on cost efficiency by reducing its R&D expenses by 16%.
However, its portfolio rebalancing for future growth has not stopped.
SK On plans to secure an annual ESS capacity of 3GWh by converting some lines at the Seosan plant to LFP, and will begin full-scale mass production from the beginning of next year.
Furthermore, to respond to the North American market, the company’s strategy is to achieve orders of more than 20GWh this year by converting the Tennessee plant to an independent operating system and utilizing it as an ESS production base.
In February, SK On also secured more than half of the total volume (approximately 50.3%, 284MW) in the government’s ‘2nd ESS Central Contract Market’ competitive bidding.
An industry official said, “In a situation where the EV chasm is prolonged, ESS has become not an option but an essential escape route for growth for the three battery companies,” adding, “Ultimately, who can stably build local production capacity in North America and a product portfolio equipped with price competitiveness such as LFP first will be the core of an earnings rebound.”
Michael Herh
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