Since 2022, Korean battery companies have accelerated the production pace of cylindrical batteries and strived to catch up with the development trend of global power battery technology. South Korean battery companies represented by LG New Energy and Samsung SDI have successively announced plans to expand production capacity, and are fully cooperating with European and American auto companies.
LG Group announced on May 26 that it plans to invest 106 trillion won in core businesses such as power batteries from 2022 to 2026, including a new 4680 cylindrical battery production line at LG New Energy’s Ochang factory. The 4680 battery refers to a large cylindrical battery with a diameter of 46 mm and a height of 80 mm. The battery energy is 5 times higher than that of the 2170 battery (21 mm in diameter and 70 mm in height), the power output is increased by 6 times, the battery cruising range is increased by 16%, and the production process is less. , which can reduce production costs and facilitate mass production. Some battery industry experts have called it a "game changer" for the global battery industry.
Immediately afterwards, LG New Energy announced in early June that it would invest 580 billion won to expand the production capacity of 4680 cylindrical batteries at the second plant in Wuchang, North Chungcheong Province, South Korea, and is expected to start mass production in the second half of 2023. The Korean battery industry believes that LG New Energy's second factory in Wuchang will supply Tesla, and it is estimated that LG New Energy can earn nearly 2 trillion won from Tesla's 4680 battery orders every year. LG New Energy also announced that it will invest 150 billion won in the first plant in Wuchang to expand the production capacity of 2170 cylindrical batteries.
At present, LG New Energy's main customers include automakers such as Tesla, General Motors and Volkswagen, and have built battery production bases in China, the United States and South Korea. In March this year, LG New Energy announced the establishment of a second wholly-owned power battery factory in Arizona, USA, which is the first cylindrical battery factory operated by LG New Energy in the United States. With a total investment of 1.7 trillion won, the plant has an annual production capacity of 11 GWh and is scheduled to start production in the second half of 2024. LG New Energy also plans to jointly invest with multinational automaker Stellantis to build a power battery factory in Canada. The plant will be commissioned in the first quarter of 2024 with an annual capacity of more than 45 GWh.
According to data from SNE Research, a South Korean market research institution, in the first quarter of 2022, LG New Energy ranked second in the global power battery rankings, second only to China's CATL. China's CATL has a market share of 35%, and LG New Energy has a market share of 15.9%.
Following South Korea's LG New Energy, South Korea's Samsung SDI has also decided to enter the medium and large (46mm diameter) cylindrical battery market. It is expected to build a new test production line in the Cheonan plant in Chungcheongnam-do, South Korea, and produce battery samples in the first half of 2023. Different from LG New Energy, although Samsung SDI has decided to develop a battery with a diameter of 46 mm, the product length is being negotiated with the customer company. The battery size is the same or longer.
If Samsung SDI mass-produces longer specifications than 4680 batteries, it will take the lead in the cylindrical battery market to have a more advanced manufacturing process than other battery manufacturers. At present, the time and scale of Samsung SDI's mass production of medium and large batteries has not yet been determined, and the Korean battery industry generally expects to start production in 2025. At present, only Tesla uses 4680 batteries in the production of electric vehicles, and the Korean industry expects that more vehicle manufacturers will use medium and large cylindrical batteries in the future.
According to data from SNE Research, Samsung SDI's market share in the global electric vehicle battery market in the first quarter of 2022 is 3.8%, showing a downward trend compared with 2021. However, the Korean battery industry believes that Samsung SDI is a high-nickel prismatic battery with a nickel content of more than 90%. It still has relatively advanced technology, and has now determined to enter the medium and large cylindrical battery market, which may boost its market share in the future. BMW, one of Samsung SDI's main suppliers at present, still insists on using prismatic batteries, but the industry believes that it is very likely to switch to cylindrical batteries in the future.
