January 2, 2025 – According to a report published today by Business Korea, the utilization rates of factories belonging to LG Energy Solution, Samsung SDI, and SK On – the three major Korean battery companies – have significantly declined due to the global slump in demand for electric vehicles (EVs). This downturn has prompted these enterprises to adopt various strategies to counter the market challenges.
An industry report dated December 30th revealed that LG Energy Solution’s average factory utilization rate for the third quarter of this year stood at 60%, a notable decrease from 73% in the same period last year. SK On experienced a more drastic drop, with its utilization rate plummeting from 95% to a record low of 46%. Samsung SDI, which only disclosed the utilization rate for its small batteries, also reported a 9-percentage-point decrease to 68%.
The media outlet attributed the lower battery production compared to factory capacity primarily to the sluggish recovery in EV demand. This slowdown has exacerbated the fixed cost burden, including labor expenses, thereby undermining the profitability of these factories.
Data from SNE Research indicated that major clients, led by Tesla, sold 1.425 million EVs (including plug-in hybrids) globally from January to October 2024, marking a 1.1% year-on-year decrease. Similarly, Hyundai and Kia’s EV sales declined by 3.4% to 455,000 vehicles during the same period.
Furthermore, the global market share of the three Korean battery companies fell sharply from 31.7% in 2021 to 20.1% in the first ten months of 2024. Conversely, Chinese companies such as CATL and BYD, benefiting from government support, a robust domestic market, and the cost advantages of low-cost lithium iron phosphate batteries, saw their market share rise from 39.7% to 53.6%.
In response to these challenges, the Korean battery industry has initiated an emergency management mechanism and is actively seeking countermeasures. SK On entered an emergency management state in July 2024, froze all executive salaries until profitability recovers, and implemented its first voluntary retirement program since its establishment. LG Energy Solution has also tightly controlled its personnel expansion. Meanwhile, Samsung SDI appointed Choi Joo-sun, the former president of Samsung Display, as its new leader in November 2024, signaling a management reform.
