LG Energy Solution, Samsung SDI, SK On Brace for Prolonged EV Battery Slump

[Korea Financial Times, Gwak Horyung] South Korea’s three major battery manufacturers—LG Energy Solution, Samsung SDI, and SK On—recorded a combined operating loss of KRW 800 billion in the fourth quarter of 2024. As the extended downturn in the EV industry persists, the companies are scaling back investments to cope with the challenges.

On the 6th, SK Innovation announced that its battery subsidiary, SK On, posted an operating loss of KRW 359.4 billion in Q4 2024. This represents a KRW 340 billion increase in losses compared to the KRW 18.6 billion deficit recorded in the same period of 2023. The company’s total annual losses for 2024 reached KRW 1.127 trillion.

LG Energy Solution, which had reported its earnings earlier, recorded an operating loss of KRW 225.5 billion, while Samsung SDI posted a deficit of KRW 256.7 billion. Both companies saw their losses increase by approximately KRW 560 billion year-over-year. The decline is attributed to sluggish EV sales in Europe and falling battery metal prices. The slowdown in EV growth, which began in the second half of 2023, appears to be persisting.

Hopes for a dramatic market rebound this year remain slim. The second administration of U.S. President Donald Trump, who is known for his skepticism toward EVs, has now taken office. Upon inauguration last month, President Trump immediately repealed an executive order from the Biden administration that mandated EV adoption. He is also considering cutting EV subsidies, raising concerns across the industry.

Battery companies, which had previously dismissed the "Trump risk" as having a low chance of materializing, are now growing increasingly uneasy.

During an earnings conference call on January 24, LG Energy Solution stated, "Policy uncertainty in North America is quite high." While the company believes there is little likelihood of changes to battery production subsidies under the Advanced Manufacturing Production Credit (AMPC), it sees a risk of EV purchase subsidies being reduced or eliminated. This uncertainty is leading automakers to adopt a more conservative approach to their EV plans, which in turn is affecting battery production rates.

Samsung SDI, which is set to begin full-scale operations at its first U.S. plant this year, acknowledged the challenges, stating, "Given the fluctuating market conditions and uncertainty, we are in discussions with our customer, Stellantis, regarding annual production volumes."
SK On noted that while some customers managed stable sales despite not qualifying for subsidies last year, this was mainly due to Hyundai and Kia, which boosted their U.S. EV sales through self-imposed discounts. The impact of subsidies on pricing remains significant. Additionally, SK On announced that the launch of its Tennessee plant, originally scheduled to begin production this year for its customer Ford, has been postponed to next year.

In Q4 2024, the financial benefits from the AMPC program amounted to KRW 377.3 billion for LG Energy Solution, KRW 81.3 billion for SK On, and KRW 24.9 billion for Samsung SDI. With an increasing portion of their earnings now tied to U.S. policies, any drastic changes could deal a severe blow to their financial performance.

To cope with the prolonged downturn, all three companies plan to reduce capital expenditures this year.

LG Energy Solution announced that it will cut its investment budget by 20–30% compared to last year’s KRW 13 trillion, meaning it will likely spend around KRW 10 trillion in 2025. SK On plans to slash its investments from KRW 7.5 trillion to KRW 3.5 trillion—roughly half. While Samsung SDI did not disclose a specific investment figure, it confirmed that spending will decrease compared to last year’s KRW 6.6 trillion.
Gwak Horyung (horr@fntimes.com)