Despite the acceleration of the power business of the South Korea's three major battery manufacturers in 2019, it is still difficult to hide the anxiety of its eagerness to achieve profitability in the battery sector and the challenges it faces in the future.

Affected by the acceleration of the global automotive electrification process,Samsung SDI, LG ChemandSKIThe three South Korea battery giants have clearly accelerated the pace of construction of their global power battery capacity.

At the same time, the above three battery companies also received huge battery orders in 2019, and the revenue of the battery business increased significantly, thus improving the profitability of the department and even turning losses into profits.

According to the production capacity layout location of the three enterprises and the time node of investment and expansion, Samsung SDI, LG Chemical and SKI will all start to make efforts from 2020 and are full of confidence in their future development prospects of power battery business and the global power market.

It is worth noting that although Korean battery companies are continuing to increase their power business, they are also facing a series of "internal and external troubles". Therefore, it remains to be seen whether the three battery giants can achieve their strategic goals in the future.

Compared with 2018, Samsung SDI, LG Chemical and SKI significantly increased their investment in the field of power batteries in 2019, and have spent huge sums of money to greatly expand production capacity. The goal is to maintain a leading edge in power battery production capacity, start concentrated release in 2020, and reach a scale of hundreds of GWh by 2025.

Judging from the layout route and production time, Samsung SDI, LG Chem and SKI have adopted similar market strategies and customer goals, mainly concentrated in China and Europe and the United States, which indicates that these three battery companies will have direct and fierce competition in the future.

In 2019, Samsung SDI further increased its shareholding in the joint venture Samsung Huanxin (Xi'an) Power Battery Co., Ltd. at a price of US $34 million (about RMB 0.239 billion), from 15% to 65%, becoming the largest shareholder of Samsung Huanxin.

This move is seen by the outside world as a signal for Samsung SDI to re-increase the Chinese power market. The purpose is to restore its strength in the Chinese power battery market and prepare for market competition after the subsidy is canceled.

Once the subsidy is completely withdrawn, Samsung may further strengthen its dominance in the joint venture, and it is not ruled out that it may become the sole shareholder of Samsung Ring in the future.

In the process of increasing the shareholding ratio, Samsung SDI also restarted the new capacity expansion plan of Samsung Ring. The new project will build a 5.4 million 120Ah lithium ion power battery production line, a 5.4 million 37Ah lithium ion power battery production line, and a total of 221 new lithium ion battery production line equipment (sets).

In addition to expanding production capacity in China, Samsung SDI is also actively expanding the capacity of its European factories.

In October 2019, Samsung SDI plans to invest about 9.2 billion yuan to expand its Hungarian power battery factory. The expanded factory can meet the battery demand of 50000 electric vehicles.

In addition, Samsung SDI also announced that it will invest 62.7 million US dollars (about 0.434 billion yuan) to build a power battery factory near Detroit, Michigan, which will serve as the battery pack manufacturing plant, R & D center and automotive battery operation headquarters of Samsung SDI USA.

At present, Samsung SDI's core customers include BMW, Volkswagen, Volvo, Audi, etc. At the same time, it is also negotiating with Chrysler, Ford and India's Mahindra and other OEMs on the supply plan for electric vehicle battery packs, and actively promoting the signing of supply contracts.

It is worth noting that, driven by customer demand for power batteries and the growth of ESS sales at home and abroad, Samsung SDI's lithium battery business grew significantly in 2019, and even turned losses into profits in the third quarter, and was optimistic about the fourth quarter.

►►In November, Samsung SDI and BMW signed a battery supply contract worth 2.9 billion euros (about 22.605 billion yuan) from 2021 to 2031;

►►In September, Samsung SDI signed an agreement with Akasol, a German power battery system manufacturer. Samsung SDI will supply Akasol with lithium battery cells and modules with a total capacity of 13GWh from 2020 to 2027;

►►In July, Samsung SDI formed a strategic alliance with Volvo Group. Samsung SDI will provide battery cells and modules for Volvo's electric trucks, which will be assembled in its factory.

In July 2018, LG Chem announced an investment of US $2 billion to build a 32GWh power battery plant in Nanjing, China. The plant started construction in October of the same year and has been mass produced in October 2019.

In January 2019, foreign media reported that LG Chem plans to invest 1.2 trillion won ($1.07 billion) to expand two battery factories in China by 2020. In October, LG Chem issued a regulatory document stating that it will invest US $0.417 billion (approximately 2.947 billion yuan) in the Nanjing plant of its wholly-owned subsidiary LG Chem to meet the needs of electric vehicle manufacturers.

In June of the same year, LG Chem announced the establishment of a joint venture with Shanghai Huapu Guorun (a subsidiary of Geely Automobile Holdings), which will form a production capacity of 10GWh after the project reaches production.

At the same time, in 2019, LG has established strategic partnerships with Chinese power battery industry chain companies such as Tianqi Lithium, Huayou Cobalt, Enjet, Ganfeng Lithium, and Grimme in terms of upstream materials, and even won battery orders from Tesla's Shanghai plant.

Judging from the above layout projects, LG Chem has regarded China as one of its most important markets in the future. After a series of layouts, its territory in the Chinese market has begun to take shape. Later or will cooperate with more Chinese OEMs and battery factories, so as to quickly enter the Chinese market.

In addition, LG Chem is also expanding its battery capacity in Europe and the United States. On the one hand, it plans to invest 0.577 billion US dollars (about 3.9 billion yuan) to expand the Polish factory; on the other hand, it plans to establish a joint venture with General Motors in the United States.

In terms of battery orders, LG Chemical's power battery installed capacity increased significantly in 2019, mainly due to the large increase in sales of electric vehicles in its main engine plant.

At present, LG Chem mainly supplies power batteries to international OEMs such as Volkswagen, Hyundai, GM, Chrysler and Renault, and has signed a 10-year supply agreement with Volvo.

Based on the continued growth in demand for lithium batteries in the future, LG Chem also plans to achieve $26.7 billion (about 183.834 billion yuan) in lithium battery revenue in 2024, and lithium battery sales are expected to reach 356GWh.

Compared with Samsung SDI and LG Chemical, SKI's power battery business is smaller and the market started late, but it has increased its investment in the power battery field since 2017. Its goal is to become the third largest in the global electric vehicle battery market share by 2025.

Since 2018, SKI's investment in this field has been flat or even exceeded that of friends, and it plans to achieve a lithium battery production capacity of more than 100GWh by 2025. In 2019, SKI landed several battery capacity expansion projects and won several battery orders at the same time.

In August 2018, SKI, in cooperation with Beijing Automotive and Beijing Electronics Holdings, established Nortel in Changzhou, Jiangsu Province, with a capacity plan of 7.5GWh. On December 5, 2019, Nortel was officially completed and put into production, and will produce NCM811 soft-pack batteries.

In the same month, SKI plans to invest US $1.05 billion (about 7.38 billion yuan) to build a new power battery factory in Yancheng, Jiangsu Province, mainly to supply Dongfeng Yueda Kia cars in Yancheng. In addition, SKI will also set up a joint venture with Yiwei Lithium Energy in China to produce soft-pack power batteries.

At the same time, SKI is also expanding its production capacity in Hungary and building a new battery factory in the United States. There is also news that SKI will also cooperate with Volkswagen to build a battery factory in Germany.

Since SKI won a huge battery order from Volkswagen in 2018, SKI's power business has continued to grow in 2019 and has become a battery supplier to several main engine factories.

Up to now, SKI has become a battery supplier to Daimler, Volkswagen, Hyundai, Kia, Ferrari and other international car companies, and is discussing cooperation with other OEMs.

Judging from the capacity layout and orders of the above three companies, Samsung SDI, LG Chem and SKI have all made great progress in their power businesses in 2019, laying the foundation for them to compete for the global power market from 2020.

It is worth noting that although Samsung SDI, LG Chem and SKI have certain leading advantages in product quality, technology, scale and customer base, the pressure and challenges they will face in the future are still not small.

On the one handCompetition in the power battery market has intensified and competitors have risen rapidly. In addition to Korean battery companies, including Panasonic, Ningde Times, BYD, Northvolt and other Chinese, Japanese and European battery companies are also making efforts in the international power market, forming a direct impact and challenge on the three South Korea battery companies.

On the other handBattery prices continue to decline, corporate earnings are weak. Due to the fierce market competition and cost reduction pressure, the current OEMs are asking battery factories to cut prices sharply, resulting in a decline in the profitability of battery companies.

At present, the battery business of Samsung SDI, LG Chemical and SKI as a whole is in a state of loss or break-even, while the battery price continues to decline and investment continues to increase, or will make the above three battery enterprises in a state of long-term loss, limited profit space.

In addition, there is also a "life and death crisis" between Korean battery companies ".

At present, LG Chem and SKI are in the midst of fierce patent litigation, both sides are unwilling to settle, and even put forward a lawsuit against the other party to restrict its production and sales of power batteries in the United States. And once the case is lost, the blow to one party will be fatal.

"If this battle continues, no matter who wins or loses, the two companies will suffer a fatal blow unless the two sides reach a settlement. And this dispute is also a setback for automakers."

The intensity of the fight worries South Korea government officials because it could simultaneously damage the reputations of both companies and allow other competitors to take market share from both.

On the whole, a series of layout actions of Samsung SDI, LG Chem and SKI are more like a gamble, which also reflects that the three companies are currently facing great pressure and challenges in the power market, especially in how to improve The profitability and market share of its battery division are more urgent.