South Korea’s leading battery manufacturers are bracing for significant fourth-quarter losses as the electric vehicle market faces a prolonged period of stagnating demand. (Image courtesy of Yonhap)
SEOUL, Jan. 10 (Korea Bizwire) — In a stark reversal of fortune, South Korea’s leading battery manufacturers are bracing for significant fourth-quarter losses as the electric vehicle market faces a prolonged period of stagnating demand.
LG Energy Solution, one of the country’s top battery makers, reported an operating loss of 225.5 billion won in the fourth quarter, a dramatic shift from its 338.2 billion won operating profit in the same period a year earlier. Without the 377.3 billion won in U.S. Advanced Manufacturing Production Credits (AMPC) factored in, the company’s underlying loss reached 602.8 billion won. Sales dropped 19.4% to 6.45 trillion won from 8.01 trillion won.
The outlook appears equally grim for its domestic rivals. Samsung SDI is expected to swing to a loss in the fourth quarter, according to analyst consensus compiled by Yonhap Infomax. SK On, which had just achieved its first quarterly profit in the third quarter, is also projected to return to the red.
The industry faces what analysts describe as a “triple threat”: weakening demand, oversupply, and policy uncertainty. Major automakers have responded to the market slowdown by adjusting their electric vehicle launch schedules and maintaining higher inventory levels, adopting more conservative sales strategies.
Adding to the pressure, Chinese competitors like CATL and BYD are rapidly expanding their market share, leveraging their price competitiveness to address domestic oversupply through exports.
The road ahead appears particularly challenging with the potential return of Donald Trump to the White House. Industry observers worry that his administration might eliminate or reduce battery industry support measures like the Inflation Reduction Act, which South Korean manufacturers have heavily relied upon through programs like the AMPC.
The European Union’s moves to potentially relax carbon dioxide emission regulations, originally set to take effect this year, present another concern for the industry.
“If automakers continue to slow their electric vehicle strategies, Korean battery makers will inevitably face downward revisions in their earnings forecasts,” said Lee Yong-wook, an analyst at Hanwha Investment & Securities. “Market expectations for the EV sector will likely decline further, with any recovery hinging on improved demand.”
In response to these headwinds, South Korea’s battery trio has implemented stringent measures. LG Energy Solution initiated company-wide crisis management in December, while SK On conducted its first voluntary retirement program since its establishment. Samsung SDI appointed Choi Joo Sun, formerly of Samsung Display, as its new president in November 2024 to lead a management reform.
The companies have also moderated their expansion plans, optimizing production at major facilities in the United States and temporarily halting some construction projects. Their strategy for 2025 focuses on diversifying product portfolios and expanding into non-EV sectors, such as energy storage systems.
In their New Year addresses, the leaders of all three companies emphasized technological advancement as key to weathering the current market downturn and emerging stronger in its aftermath.
Kevin Lee (kevinlee@koreabizwire.com)
