Korean Battery Makers’ Order Backlog Surpasses 1,000 Trillion Won

According to the Mirae Asset Securities Research Center on June 4, the order backlog of three Korean battery makers -- LG Energy Solutions, SK On, and Samsung SDI -- is expected to exceed 1 trillion won (US$765 million) at the end of the third quarter of 2023. Their order backlog has been growing steeply as global automakers are placing a slew of orders with them.

LG Energy Solution's backlog at the end of the third quarter was over 600 trillion won (US$459 billion), which dwarfs those of the two other Korean battery makers. Since establishing its battery joint venture with General Motors (GM) in May 2020, LG Energy Solution has been steadily expanding its partnerships with global automakers.

LG Energy Solution's exclusive plant in Michigan and first joint venture plant with GM in Ohio have already started operations. Under construction are the second joint venture plant with GM in Tennessee, a joint venture plant with Honda in Ohio, the third joint venture plant in Michigan, a joint venture plant with Stellantis in Ontario, Canada, and a standalone plant in Arizona.

SK On's order backlog is estimated at 340 trillion won (US$260 billion). In May 2021, the Korean battery maker announced BlueOval as a joint venture with Ford to build 129 GWh battery plants in Kentucky and Tennessee in the United States. The company also recently signed a 35 GWh North American joint venture with Hyundai Motor Group. The company is also expanding its customer bases in Japan and Europe.

Samsung SDI's order backlog is estimated at 160 trillion won (US$122 billion). The company announced the establishment of a North American joint venture with Stellantis in May 2022 and began full-scale investment in the joint venture in September of the same year. The company has also inked an agreement with GM to build a 30 GWh joint venture plant in the United States. Samsung SDI has cooperative relationships with Volvo, Stellantis, and BMW, and is expected to ramp up volume in the future.

The three Korean battery companies are also stepping up their efforts to secure core battery materials such as anode materials, cathode materials, separators, and electrolytes. This is because even though they have established joint ventures with automakers they cannot make batteries without securing key materials. Based on estimated order backlogs at the end of the third quarter of this year, the market size by material is estimated to be about 440 trillion won (US$337 billion) for cathode materials, 88 trillion won (US$67 billion) for anode materials, 66 trillion won (US$51 billion) for separators, and 33 trillion won (US$25 billion) for electrolytes.

The three Korean battery makers are focusing on securing cathode materials, a core material that accounts for 40 percent of battery production cost. The cathode material determines battery performance including capacity and output. They are focusing on establishing long-term partnerships with cathode material companies such as EcoPro BM, L&F, and POSCO FUTURE M by signing mid- to long-term supply contracts.

In fact, Ultimate Cells recently signed a nine-year, 13.18 trillion won (US$10.09 billion) high-nickel cathode material supply contract with POSCO FUTURE M. Industry insiders believe that after mid- to long-term supply contracts on cathode materials, battery makers will sign contracts to purchase other materials such as anode materials and separators. SK On recently signed an anode material joint development agreement with U.S. mineral development company Westwater. Over the next three years, the company will receive anode materials from Westwater. The anode materials will be used in SK On's plant in the United States to improve battery performance. Anode materials determine battery life, charging speed, and other factors.