Domestic battery corporations are transforming and expanding local factory facilities to enhance their influence in the European market. Europe has been promoting battery localization led by the largest regional corporation, Northvolt, but with Northvolt filing for bankruptcy, there is a need to procure batteries from countries like South Korea and China. South Korean corporations have established mass production capabilities in the region through proactive investments.
According to the industry on the 1st, Swedish battery corporation Northvolt recently filed for bankruptcy in its home country, stating it had not secured the essential financial conditions to continue operations. Established in 2016, Northvolt emerged as a challenger to curb battery companies from China and South Korea. It is reported that the capital raised from various European countries and electric vehicle manufacturers has reached approximately $10 billion (about 14.7 trillion won).
Northvolt established its first gigafactory in Sweden and began construction on a second factory in Germany last year, but it failed to overcome the industry’s entry barriers with low yield rates (the ratio of acceptable products). Northvolt explained the reasons for its bankruptcy filing by stating, "It has become difficult to secure the company's future due to limited time and financial impacts."
In light of Northvolt's bankruptcy and other factors, the demand for batteries produced by South Korean companies in Europe is increasing. It is reported that BMW canceled an electric vehicle battery supply contract with Northvolt, signed in 2020, and transferred that volume to Samsung SDI last year.
Domestic battery corporations invested early in the European market. LG Energy Solution has a plant in Wrocław, Poland, with an annual production capacity of 86 gigawatt-hours (GWh). Samsung SDI has two plants in the Gyeid region of Hungary, with a production capacity estimated at approximately 30 to 40 GWh. SK On also operates a first plant (7.5 GWh) and a second plant (10 GWh) in Komárom, Hungary, and completed construction of a third plant (30 GWh) in the Ivanka region last year, bringing total production capacity to 46.5 GWh.
The European electric vehicle market is experiencing rapid growth, aided by the Action Plan announced by the European Union (EU) for the automotive institutional sector. The plan focuses on expanding electric vehicle infrastructure, including the expansion of electric vehicle charging stations and increased investment in battery facilities. According to the European Automobile Manufacturers' Association (ACEA), the sales volume of pure electric vehicles (BEV) in Europe during January and February this year totaled 255,489 units, representing a 28.4% increase compared to the same period last year.
Domestic companies are working hard to expand their influence in Europe by transforming and expanding their factory production lines. LG Energy Solution is converting parts of the electric vehicle battery production line at its Wrocław plant into a battery for energy storage systems (ESS). The company recently signed a supply contract for LFP (lithium iron phosphate) batteries for energy storage systems (ESS) with Poland's state-owned energy company PGE, planning to produce all the batteries at the Wrocław plant for delivery.
Samsung SDI recently announced a capital increase worth 2 trillion won, stating its plans to invest 600 billion won in expanding its factory in Hungary. Kim Jong-sung, vice president of Samsung SDI, noted at last month's shareholder meeting, "We have received orders for premium cylindrical batteries from major automotive manufacturers in Europe and Asia, and we are actively advancing the 46-pi (46 mm diameter cylindrical battery) and LFP (lithium iron phosphate battery) projects, which are in the order confirmation stage."