An executive at South Korea's LG Solar (LGES) said the company is in talks with about three Chinese material suppliers to produce batteries for low-cost electric vehicles in Europe, after the European Union imposed tariffs on Chinese-made electric vehicles and competition. will be further intensified.
LG New Energy's pursuit of potential partnerships comes amid a sharp
slowdown in demand from the global electric vehicle industry, underscoring the growing pressure on non-Chinese battery companies from automakers to lower prices. to a level comparable to that of Chinese competitors.
This month, French automaker Groupe Renault said it would use lithium iron phosphate battery (LFP) technology in its plans to mass-produce electric vehicles, choosing LG New Energy and its Chinese rival Contemporary Amperex Technology Co. Ltd. (CATL) as partners. , to establish supply chains in Europe.
Groupe Renault's announcement follows a decision by the European Commission in June. After months of anti-subsidy investigations, the European Union decided to impose tariffs of up to 38% on electric vehicles imported from China, prompting Chinese electric vehicle manufacturers and battery companies to commit to investing in Europe.
Wonjoon Suh, head of LG New Energy's advanced vehicle battery division, told Reuters: "We are negotiating with some Chinese companies who will develop lithium iron phosphate cathode materials with us and produce this material for Europe." But the person in charge said declined to name the Chinese company in talks.
"We are considering various measures, including establishing joint ventures and signing long-term supply agreements," Wonjoon Suh said, adding that such cooperation would help LG New Energy reduce the manufacturing cost of its lithium iron phosphate batteries within three years. to a level comparable to that of Chinese competitors.
The cathode is the most expensive single component in an electric vehicle battery, accounting for about one-third of the total cost of an individual cell. According to battery market tracker SNE Research, China dominates the global supply of lithium iron phosphate cathode materials, with its largest producers being Hunan Yuneng New Energy Battery Material Co., Ltd., Shenzhen Shenzhen Dynanonic and Hubei Wanrun New Energy Technology.
Currently, most cathode materials for electric vehicle batteries are mainly divided into two types: nickel-based cathode materials and lithium iron phosphate cathode materials. For example, the nickel-based cathode material used in Tesla's long-range models can store more energy, but the cost is higher. Lithium iron phosphate cathode material is favored by Chinese electric vehicle manufacturers such as BYD. Although it stores relatively less energy, it is safer and lower cost.
South Korean battery companies have always focused on the production of nickel-based batteries, but now, as automakers want to expand their product lines to more affordable models, they are also expanding into the production of lithium iron phosphate batteries under pressure. . But this field has been dominated by Chinese competitors. Suh said that LG New Energy is considering cooperating with Chinese companies to produce lithium iron phosphate cathode materials in Morocco, Finland or Indonesia to supply the European market.
LG New Energy has been in discussions with automakers in the United States, Europe and Asia regarding supply agreements for lithium iron phosphate batteries. But Suh said demand for affordable electric models is stronger in Europe, where the segment accounts for about half of EV sales in the region, higher than in the United States.
According to SNE Research, in the first five months of this year, South Korean battery manufacturers LG New Energy, Samsung SDI and SK On had a combined share of 50.5% in the European electric vehicle battery market, of which LG New Energy's share was 31.2%. The market share of Chinese battery companies in Europe is 47.1%, with CATL ranking first with a share of 34.5%.
Previously, LG New Energy has established battery joint ventures with automakers such as General Motors, Hyundai Motor, Stellantis and Honda Motor. But with growth in electric vehicle sales slowing, Suh said installation of some of the equipment needed for the expansion could be delayed by up to two years in consultation with partners. He predicts that EV demand will recover in Europe in about 18 months and in the U.S. in two to three years, but that will depend in part on climate policy and other regulations.
Affected by Tesla's weak performance, LG New Energy's stock price closed down 1.4%, underperforming South Korea's KOSPI index, which fell 0.6%.
Post time: Jul-25-2024