Major battery makers see steady drop in plant operation rates in S. Korea

Seoul, Aug 15
Major battery makers reported a continued decrease in factory utilisation rates in the first half due to waning global demand for electric vehicles (EVs), data showed on Friday.

In its semiannual report, industry leader LG Energy Solution Ltd. (LGES) said its production capacity stood at 20.1 trillion won (US$14.5 billion) in the first six months of this year, with an average plant capacity utilisation rate of 51.3 percent.

The figure has steadily declined from 73.6 percent in 2022 to 69.3 percent in 2023 and 57.8 percent last year, reports Yonhap news agency.

Samsung SDI Co.'s operation rate of plants for small batteries fell to 44 percent in the January-June period from 58 percent last year, according to the company's semiannual report. Although the report does not disclose rates for its plants for medium-sized and large batteries, their utilization rates are also assumed to have declined.

SK On Co.'s operation rate, in contrast, rebounded to 52.2 percent in the first half from 43.6 percent last year, which had marked a steep drop from 87.7 percent in 2023.

The sluggish performance of Korean battery companies can be attributed to the prolonged EV chasm, which is expected to continue throughout this year.

Earlier this year, LGES Chief Executive Officer (CEO) Kim Dong-myung said global battery demand will likely hit the lowest point in the first half before the market rebounds as early as 2026.

Despite these unfavourable circumstances, Korean companies continued efforts to find new growth engines by expanding investment in research and development (R&D).

In the first half, LGES spent 620.4 billion won in R&D, accounting for 5.2 percent of the combined revenue during the period. The company spent 4.2 percent of its sales on R&D last year and 3.1 percent in 2023.

Samsung SDI invested 704.4 billion won, or 11.1 percent of sales, in R&D during the same period, up from 7.8 percent in 2024.

But SK On only spent 0.52 percent of its sales, or 148 billion won, on R&D in the January-June period.