Summary of secondary battery issues

[Serious over-supply of batteries and strategy miss] Summary of secondary battery issues

Batteries have three times the supply capacity compared to demand, so no company is making a profit to recover investment costs.

The battery manufacturing process is easy to automate, does not require ultra-precise processes as much as semiconductors, and because of the large proportion of material processing, it is easy to increase supply, so overinvestment is serious, especially in China.

In this situation, as the U.S. and Europe try to secure their own supply chains, surplus production from China is pouring into global markets, and the cost competitiveness of LFP batteries is further strengthening.

Falling battery prices are good news for the energy transition, but it's heartbreaking for investors. Investments in batteries and related supply chains must be thought through unless electric vehicle penetration levels rise significantly.

A business model that makes electricity difference transactions using ESS may be more promising. Already in Australia, electricity difference transactions account for more revenue than ESS's power grid assistance service.

In addition, pouch-type batteries, which have been widely adopted in laptops and mobile phones, are losing their competitiveness in the electric vehicle market. Even simple accidents often cause fires in electric vehicles due to inherent problems such as poor structural rigidity of the pouch battery itself and difficult heat management.

Installing batteries to increase energy density makes heat dissipation difficult and degradation progresses faster. Eventually, the battery pack is solved by installing a thermal management device and increasing structural rigidity, but in this case, the energy density of the entire pack decreases and the cost increases, so it must be overcome with technology. This is the most urgent challenge for SKON, which currently only produces pouch batteries.

The electric vehicle market is expected to be divided into two parts in the future with a high-nickel high-capacity cylindrical (4680) battery and an LFP blade battery. It is believed that the three domestic companies should plan well on how to produce LFP square (blade) batteries in the U.S. to be adopted for mid- to low-priced electric vehicles.