GM's Volt, Electric BMWs May Boost South Korean Battery Makers
By Shinhye Kang and Seonjin Cha
Oct. 22 (Bloomberg) -- Electric cars developed by General Motors Co. and Bayerische Motoren Werke AG may help South Korean battery makers grab market share from Japanese rivals tying up with Toyota Motor Corp. and Honda Motor Co.
Seoul-based LG Chem Ltd., which will provide batteries for GM’s Chevrolet Volt car next year, and Samsung SDI Co. may seize more than 30 percent of a $36 billion electric-car battery market by 2020, said Park Jae Chul, an analyst at Mirae Asset Securities Co. in the South Korean capital.
GM, BMW and other carmakers will introduce electric vehicles to meet stricter emission regulations, challenging Toyota and Honda, which dominate the market for gasoline- electric hybrid cars. Korean battery manufacturers offer U.S. and European carmakers an alternative to relying on Japanese suppliers.
“The U.S. and European carmakers would feel more comfortable with LG and other Korean battery makers,” said Lee Jin Sik, a Seoul-based auto production analyst at CSM Worldwide Inc., an industry consulting firm. “The strength should spur Korean battery markers to grab a significant share in the global electric-car market in the long term.”
LG Chem, which doubled this year, fell 0.5 percent to 204,500 won and Samsung SDI dropped 2.6 percent to 133,500 won at the close of trading on the Korea Exchange today. Samsung SDI has jumped 143 percent this year compared with the key Kospi index’s 45 percent advance.
GM’s Supply Base
Batteries represent about 25 percent of the price of electric cars, Park said. Global demand for hybrid and electric cars may grow to 4.6 million vehicles by 2015 from 950,000 this year, boosting the market for batteries to 10 trillion won ($8.5 billion), according to LG Chem, South Korea’s biggest chemical maker, which is aiming for a 20 percent share of that market.
Earlier this year, Detroit-based GM picked LG Chem as its supplier for the Volt, which goes on sale late next year.
“We’ll continue expanding our supply base here, as Korea has lots of strong, efficient and competitive suppliers,” GM Chief Executive Officer Fritz Henderson said in Seoul on Oct. 15.
Osaka, Japan-based Panasonic Corp.’s joint venture with Toyota makes batteries for the carmaker’s best-selling hybrid Prius. The venture has about 67 percent of the global market for hybrid and electric-vehicle batteries, said Takeshi Miyao, Asia director at auto research firm Carnorama. Panasonic is bidding to take over Sanyo Electric Co., which Miyao estimated has a 24 percent share.
Government Stimulus
Sanyo, also based in Osaka, makes batteries for Honda’s Insight hybrid. Honda formed a venture with JS Yuasa Corp. in April to make lithium-ion batteries for hybrids made in Japan starting next year. Sanyo also makes batteries for Volkswagen AG, Europe’s largest carmaker, and Ford Motor Co.
NEC Corp. is building a battery plant for electric cars with partner Nissan Motor Co. outside Tokyo. Nissan, Japan’s third-largest automaker, will start selling the Leaf electric car next year in the U.S., Japan and Europe.
South Korea’s government is backing domestic suppliers. The nation plans to spend 400 billion won by 2014 to develop batteries and battery-charging infrastructure, and is considering additional subsidies and tax breaks for electric-car makers and buyers. Battery manufacturers are set to receive 55 billion won to support development and research.
Hyundai’s Hybrid
The country aims to have 10 percent of the world’s electric-car market, including plug-in electric cars, by 2015 and is pushing Hyundai Motor Co., Kia Motors Corp. and other local carmakers to begin commercial production in 2011.
LG Chem plans to invest 1 trillion won by 2013 to challenge the Japanese manufacturers’ dominance amid rising demand. The company has started building an electric-car battery plant about 200 kilometers (124 miles) south of Seoul that could produce 50 million cells. They can be assembled into about 170,000 electric vehicles, Park estimated.
The battery maker also will spend $300 million building a factory in Holland, Michigan, to produce cells starting in 2013.
LG Chem also supplies batteries to Hyundai, South Korea’s biggest carmaker, which introduced its first hybrid model in July.
Chinese Competition
“We are in talks with several carmakers as global automakers are focusing on fuel-efficient models,” Ham Jae Gyung, vice president of Advanced Automotive Battery Business Division at LG Chem, said without naming any companies.
SB LiMotive Co., a venture between Suwon, South Korea-based Samsung SDI Co. and Robert Bosch GmbH, will make batteries for BMW’s electric-car project Megacity Vehicle. SK Energy Co., South Korea’s biggest oil refiner, also is in talks with carmakers including Daimler AG, South Korean online newspaper Edaily said Oct. 6, citing an SK official it didn’t identify.
Hyundai introduced a hybrid version of its Elantra compact in July, powered by liquefied petroleum gas and a lithium-ion battery made by LG Chem. The Seoul-based automaker plans to add a gasoline-electric hybrid version of its Sonata sedan and begin limited sales of electric minicars in 2010.
The forthcoming models are based on LG Chem’s lithium-ion batteries, and Hyundai’s parts-making affiliate, Hyundai Mobis Co., agreed in August to form a venture with the battery maker.
South Korean manufacturers also face competition from China, where the government has a target of hybrids and battery- powered passenger vehicles accounting for 5 percent of the market by 2011.
BYD Co., a Chinese automaker and battery producer backed by billionaire Warren Buffett, agreed in May to explore cooperation with Volkswagen AG in areas including hybrid cars and lithium battery-powered vehicles.
“Initially, South Korean battery makers may have a technological advantage,” said Kyu-Min Oh, a senior industry analyst at Frost & Sullivan in New York. “But once the race heats up, it’s going to be a very competitive market.” |
