Knowing that Korean battery makers can’t do business without those metals, some investors intentionally drive up the metals prices. These metals take up 70-80 percent of total production costs. It was only this year the battery unit of Samsung Group finally achieved a profitability of 1 percent.Īs to why it took so long for Korean battery players to turn a profit, experts point to the practice of price rigging in the global metal market.ĮV batteries use expensive metals as raw materials including cobalt, nickel and manganese. Samsung SDI, for instance, hemorrhaged losses worth 2 trillion won ($1.7 billion) between 20 from its EV battery business. This is why Korean battery firms are manufacturing fewer EV batteries instead of stocking them up and selling them later to carmakers. The condition of EV batteries deteriorates as time goes by and they can’t be kept for too long. Kim Byung-joo, an executive at the Swedish market tracker EV Volumes, said, “Since last month, Korean battery companies lowered the operating rate of their factories.”ĮV batteries have a shelf life just like food and have to be delivered to automakers on time, the executive explained. Due to the chip shortage, South Korean battery firms including Samsung SDI are manufacturing fewer EV batteries than they normally do and therefore suffering losses,” Kim said. “To make one EV, chips worth $900 are required, which is almost double compared to an internal combustion engine vehicle. Without enough chips, automakers can’t make EVs and battery suppliers have no choice but to cut down production. This winter, the profitability of South Korea’s battery trio - LG Energy Solution, Samsung SDI and SK On - is expected to get even worse, as the global chip shortage is dealing a massive blow to the EV market.Īccording to Kim Hyun-soo, an analyst at Hana Financial Investment, the ongoing chip shortage crisis is expected to continue until next year. It’s no wonder Samsung doesn’t have its own EV battery factory in the US, but is instead investing a whopping $17 billion to build its second chip plant there.Īs the numbers show, the EV battery business, despite the market hype, is not as attractive in terms of profitability.
In contrast, Samsung Electronics earned 30.4 cents for every dollar in chips it sold from July to September this year. For every dollar Samsung SDI makes by selling electric vehicle batteries, it only pockets 1 cent in profit.
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