Korea’s Chaebols Race For EV Battery Supremacy

This story is part of Forbes’ coverage of Korea’s Richest 2022. See the full list here.

As the world speeds toward low-carbon transportation, South Korea is ensuring it’s on board. Roughly 30% of the world’s electric vehicle (EV) batteries are made by three of the country’s largest family-run conglomerates, according to a February report by SNE Research in Seoul.

Leading the business giants is LG Energy Solution, the EV battery unit of LG, whose chairman and CEO Koo Kwang-mo has a net worth of $1.75 billion. In January, the unit had Korea’s largest IPO, raising $10.7 billion. SNE says it is the world’s second-largest EV battery producer with a 20% market share, after Chinese billionaire Robin Zeng’s Contemporary Amperex Technology’s 33%.

Samsung SDI, the battery arm of Jay Y. Lee’s Samsung conglomerate, first entered the EV battery market in the 2010s. Its factories, which have a roughly 5% market share, are based in China, Hungary and South Korea. Lee has a fortune of $9.2 billion.

A newcomer to the industry is SK On, the EV battery unit of Chey Tae-won’s SK. It separated from parent company SK Innovation last September. SK On’s 6% market share comes from supplying automakers such as Ford and Volkswagen. Chey’s net worth stood at $2.4 billion.

Helping encourage expansion by the three chaebols is the government’s national “K-Battery” strategy. Last July, President Moon Jae-in unveiled plans aimed at making South Korea the world’s leading EV battery manufacturer by 2030. LG, Samsung and SK were tapped to invest a combined $35 billion in facilities and R&D, in return for tax cuts of up to 50% and other benefits. LG Energy Solution says it will invest $21 billion.

The push comes at a time EVs are becoming mainstays of global automakers and gaining popularity with governments. A draft EU law would ban new, non-electric vehicles by 2035, and President Joe Biden wants the U.S. government to stop buying non-electrics by that year. Six million EVs are expected to ship worldwide this year, and 36 million by 2030, according to a January report from Gartner.

Richard Kim, associate director of automotive supply chain and technology at S&P Global, says it will be very difficult for Korean companies to take the lead in EV battery production away from Chinese manufacturers, which long have benefitted from aggressive subsidies and other forms of government support. He says the chaebols could leverage synergies in research and development. “[Korean companies] have accumulated knowledge on manufacturing battery cells,” says Kim. “They could develop technologies by themselves and nurture relationships with original equipment manufacturers, which would be a strong weapon for them to grow.”

LG Energy Solution, Samsung SDI and SK On are racing to develop alternatives to lithium-ion batteries, the current standard for EVs. Demand for EVs may outstrip the world’s supplies of lithium by 2025, according to UBS analysts last year—this supply chain issue may have been exacerbated by Russia’s invasion of Ukraine, a major source of the metal. In March, Samsung SDI started building a pilot production line for South Korea’s first solid-state batteries, a head of the government’s goal to commercialize the batteries by 2027, while SK On initiated research into sulfide-based batteries.

Despite bumps in the road, investors remain positive about the future for EV batteries, particularly in new applications. Shares in Chunbo, which makes electrolyte components for EV batteries, have risen sharply over the past year, making its founder Lee Sang-ryul a billionaire. He debuts on the list with a net worth of $1.4 billion.