South Korean Battery Makers Make Record Investments despite EV Decline

Despite a slowdown in electric vehicle sales, South Korea's three major battery manufacturers are expected to have made all-time high investments in research and development (R&D) operations last year.

It is anticipated that LG Energy Solution Ltd. (LGES), Samsung SDI Co., and SK On would increase their R&D investment from 2.47 trillion won to over 2.5 trillion won (US$1.7 billion) in 2024.

LGES, the nation's leading battery company, is reportedly projected to have invested over 1.1 trillion won in the development of next-generation batteries last year, a 6% increase over the 1.04 trillion invested the year before.

It is anticipated that Samsung SDI will spend more on research and development in 2024 than it did in 2023, which was over 1.14 trillion won. SK undoubtedly made the same 300.6 billion won in R&D investments last year as it will in 2023.

Their preemptive R&D spending were likely intended at promptly responding to a recovery in battery demand following the EV "chasm," which is occurring prior to mainstream EV deployment.

Meanwhile, the overall number of registered vehicles in South Korea topped 26 million last year, with eco-friendly cars accounting for more than 10% for the first time, thanks to increased hybrid vehicle sales, according to the government.

The Ministry of Land, Infrastructure, and Transport reports that as of the end of December, there were 26.3 million registered automobiles, a 1.3% rise over the previous year.

Regarding fuel type, liquefied petroleum gas and hybrid vehicles sold 1.85 million and 2.02 million units, respectively, while gasoline and diesel models sold 12.4 million and 9.1 million units.

Models of hydrogen and electric cars totaled 38,000 and 684,000, respectively.

A total of 2.75 million eco-friendly automobiles, including hybrid, electric, and hydrogen models, were on the road, up 626,000 from the year before.

The share of environmentally friendly vehicles rose to 10.4% of all registered vehicles, up 2.2 percentage points from the previous year and beyond the 10% threshold for the first time, given large part to the rise in hybrid models.

In contrast, the overall number of internal combustion engine vehicles fell 1.2 percent to 23.37 million, marking the second straight yearly fall.