On the 20th, Chinese CATL, the world's largest battery manufacturer, was listed on the Hong Kong stock exchange. CATL plans to use the substantial funds raised through the listing for overseas factory construction and research and development (R&D). Recently, domestic battery corporations have been struggling with poor performance and financial difficulties, leading to concerns that the competitive gap between Korean and Chinese battery corporations will widen significantly.
According to the financial market on the 20th, CATL's transactions began at 10:30 a.m. (Korean time) on the Hong Kong Stock Exchange. This marks its entry into one of the major global markets, Hong Kong, nearly seven years after being listed on the Shenzhen Stock Exchange in June 2018.
CATL's stock issuance scale is a total of 117.9 million shares, with the offering price set at 263 Hong Kong dollars (approximately 47,000 won) per share. With this listing, CATL has secured up to $5.3 billion (approximately 7.4 trillion won) in funding.
The battery industry anticipates that CATL will further strengthen its position as the world's number one manufacturer with its listing on the Hong Kong stock market. Corporations like CATL in China still report most of their sales in the domestic market, but by increasing overseas factories with the funds raised this time, their global market share could expand.
CATL is reportedly planning to mainly use the additional capital to construct a factory in Hungary. The United States has long been politically opposed to China, making the entry of Chinese battery manufacturers virtually impossible. Southeast Asia and Latin America have limited market growth due to lower purchasing power. CATL has been pursuing a plan to build a factory in Hungary to expand its market share in Europe.
If CATL establishes a factory in Hungary and proceeds with aggressive investment in R&D, the global market share gap between domestic manufacturers and CATL is likely to widen further. According to market research firm SNE Research, as of February, CATL held a 38.2% share of the global battery market, ranking first. The second place is occupied by Chinese BYD at 16.9%. Even when combining the market shares of domestic companies like LG Energy Solution (9.8%), SK On (3.9%), and Samsung SDI (3.2%), they do not reach half of CATL's share.
Recently, domestic battery manufacturers have been struggling with chronic poor performance and deteriorating profitability, leading to a shortage of funds. According to the Financial Supervisory Service's electronic disclosure, the total amount of borrowings from the three domestic battery companies was estimated at approximately 49.6 trillion won at the end of the first quarter this year. This figure represents an increase of over 7 trillion won compared to the end of last year.
In the case of SK On, the borrowing fund at the end of the first quarter was 20.39 trillion won, an increase of 4.79 trillion won compared to the end of the previous year. LG Energy Solution’s borrowing fund increased by 2.22 trillion won to 17.61 trillion won. Samsung SDI managed to increase its borrowing fund to 11.62 trillion won, a rise of 37.7 billion won, but is currently reviewing various measures to secure funds, such as issuing corporate bonds or acquiring external borrowing funds.
While borrowing funds are increasing, operating rates are declining. This is due to a decrease in battery demand resulting from a slowdown in electric vehicle demand. Moreover, the recently inaugurated U.S. administration under Donald Trump has expressed its stance on revitalizing the internal combustion engine vehicle market instead of electric vehicles, leading to uncertainty about the growth of the electric vehicle market.
LG Energy Solution's average operating rate dropped from 69.3% in 2023 to 57.8% last year, and to 51.1% in the first quarter of this year. Samsung SDI's operating rate for small batteries fell from 58% last year to 32% in the first quarter of this year. SK On also saw its operating rate decline from 87.7% in 2023 to 43.6% last year, remaining at a similar level in the first quarter of this year.
An official in the battery industry noted that if the financial difficulties persist, the gap in R&D investment between domestic corporations and Chinese firms will continue to widen, leading to a situation where it will be virtually impossible to compete in the global market. They urged that the government should take action, such as introducing a refund system (a system that refunds tax credit amounts for investments in cash) to provide support immediately.