LG Energy Solution CEO Kim Dong-myung
South Korea’s top battery maker LG Energy Solution Ltd., also the world’s No. 3, must accelerate innovation and prop up fundamentals to break through the ongoing drastic changes in the global EV industry, said its chief on Thursday.
“We must revive our innovator’s spirit that can fully embrace challenge,” LG Energy Solution Chief Executive Officer Kim Dong-myung said in a message sent to the company employees. “Do not dwell on past glory. It is time to overhaul our business and product portfolios and speed up innovation.”
His message was sent out two days after the Korean battery giant announced the suspension of its energy storage system (ESS) battery plant’s construction in Arizona, which broke ground in February.
The company made the decision as part of its efforts to adjust the pace of its scheduled investments to cope with the sluggish global EV demand, on which the battery industry heavily depends.
It has no schedule for the resumption of the construction.
Kim noted the rapid shifts in the global battery industry amid the ongoing chasm in terms of EV adoption, which has significantly changed market views on the battery industry.
Chasm is a term coined by business author Geoffrey A. Moore in his book bearing that phrase and is described as the frightening void between early adopters and widespread market success.
A bird’s-eye view of LG Energy Solution’s battery production complex in Arizona (File photo, courtesy of LG Energy)
“We were aggressive in expanding our business to take the market lead and succeeded in securing global production capacity that makes our company competitive against rivals,” said Kim. “But the progress in material, technology and process innovation, which used to be our strength, has slowed, while our competitiveness in the materials cost remains weak, resulting in lower profitability despite sales growth.”
Kim urged employees to reinforce fundamentals by revisiting planned projects and businesses to check any unintended waste.
“It is time to adjust the investment pace,” said Kim. “It is important to improve agility so we can make the right investment decisions when opportunities arise. Each department should come up with measures that can enhance flexibility and efficiency in investment.”
DRY-COATING TECHNOLOGY
LG Energy Solution has chosen dry-coating technology as a means to win a cost-cutting race amid the ongoing industry slowdown and rapid ascending of Chinese rivals.
The Korean battery maker will commercialize dry-coating technology, considered a game changer in the battery making process, by 2028, Kim Je-young, a chief technology officer at the battery maker, said in an interview with Bloomberg on Thursday.
He explained the company plans to complete a pilot production line for the dry-coating process in the fourth quarter of this year to apply the technology in mass production in 2028.
LG Energy Solution’s lithium-ion polymer batteries
Dry-coating technology has been explored as the next-generation battery-making technology by companies like Tesla Inc. and Samsung SDI Co.
The process aims to replace the energy-intensive wet process for making cathode and anode electrodes — a key component of electric car batteries.
Kim expected that the dry method could cut battery-manufacturing costs by between 17% and 30%, according to the interview.
None of the companies has yet succeeded in commercializing the technology.
Since last year when global EV demand started slowing, EV and battery makers have been delaying or canceling their planned investments after years of aggressive expansion.
Until earlier this year, LG Energy Solution expressed no intention to back down from its planned facility investment this year.
But it hinted at possible amendments in those plans based on the market condition and customers’ demand in a flexible manner.
Investment in dry-coating technology is expected to help LG Energy Solution effectively combat the ascending Chinese battery giants in the global market.
By Hyeon-woo Oh
ohw@hankyung.com
Sookyung Seo edited this article.
