[넘버스]Volkswagen’s’battery internalization’ is the reason why POSCO Chemical is disliked

Let’s interpret business, economy and technology with numbers. Numbers are a source of information. Information is open to anyone, and numbers can be seen by anyone, but not everyone has an eye to see the truth behind it. Number stories so that everyone can relate <넘버스>I’ll try to solve it easily.

‘Minister General’. It is an abbreviation for the materials, parts and equipment industries. In 2019, as Japan regulated exports of photoresists, which are key materials for semiconductors and displays, interest in the’small manager’ industry grew. However, interest in the general manager is emerging this time in the electric vehicle and battery industry.

This time, the start was provided by Volkswagen, not Japan. On the 17th, Volkswagen CEO Herbert Dys announced that it will switch to square-shaped batteries instead of pouch-type batteries through’Power Day’, which contains strategies and vision for electric vehicles. Volkswagen said it will install prismatic batteries, called Unified Cell, from production in 2023, and that it will increase the proportion of prismatic batteries to 80% by 2030.

LG Energy Solutions and SK Innovation, which supply pouch-type batteries to Volkswagen, have fallen into so-called’men-bung’ in Volkswagen’s’bomb declaration’. Volkswagen is a company that has secured the world’s second largest market share in terms of electric vehicles. Together with Tesla, he is the’master’ of the electric vehicle market. According to the industry, by 2030, Volkswagen’s battery demand is expected to reach 300 GWh (gigawatt hours) per year. 1GWh is a scale that can be mounted on 40,000 electric vehicles, and is expected to reach 12 million.

Volkswagen plans to build six battery production plants in Europe by 2030. Out of 300GWh, 240GWh is planned to be procured with batteries produced by itself. SK Innovation and LG Energy Solutions, which were Volkswagen’s flagship suppliers, have lost their’VIP’ customers.

There are places to watch Volkswagen’s’Bomb Declaration’. It is the small general manager industry. Material companies that produce cathode materials and anode materials, which are key materials for batteries, are expected to have virtually no impact on Volkswagen’s’battery internalization’.

In the finished battery market, a small number of companies are doing ‘1 in N’, while battery materials are inexpensive and have high demand for quality materials. As LG Energy Solution and SK Innovation are excluded from Volkswagen suppliers, POSCO Chemical is considering expanding its supply chain with overseas companies.

In fact, Sweden’s Northvolt AB is considering a plan to supply cathode and anode materials from POSCO Chemical. North Volt is a battery company invested by Volkswagen and has decided to supply part of the Volkswagen volume of SK Innovation and LG Energy Solutions. If POSCO Chemical supplies it to North Volt, it will be able to conserve part of the LG Energy Solution.

LG Energy Solution is supplied with materials from POSCO Chemical, and SK Innovation is supplied by Ecopro BM. Both companies supply small quantities to Volkswagen. However, if POSCO Chemical can supply it to North Bolt, it will be possible to mount a larger amount on Volkswagen than before. Last year, Tesla also visited Korea and visited POSCO Chemical after unveiling its own battery production plan. The’battery internalization’ strategy of automakers is an opportunity for small-market companies such as POSCO Chemical.

Even if an automaker directly produces batteries, the small manager company is outside the sphere of influence. It’s just that the supplier is changing from a battery company to a finished car company.

The industry is interested in the growth of POSCO Chemical. Last year, POSCO Chemical’s cathode material division grew 257% from the previous year. Last year, sales of cathode materials recorded 3514 billion won. Sales increased by 253 billion won from the previous year (98.4 billion won). In 2019, the amount of cathode materials for electric vehicles was only 38%, and the proportion increased to 88% the following year.

The anode material sector also continued to grow. Anode material sales last year was 181.9 billion won, an increase of 50.8% (61.5 billion won) from the previous year (1206 billion won). POSCO Chemical’s Energy Materials Division’s sales more than doubled last year. Last year, the energy materials division’s sales amounted to 533.2 billion won, accounting for 34% of the total sales. Of the total sales in 2019, the energy materials division’s sales amounted to only 14% (218.9 billion won). During the year, the energy materials division’s sales share increased by 20 percentage points.

The Chinese market seems to be leading POSCO Chemical’s battery material business. 48% (2566 billion won) of last year’s total sales (533.2 billion won) came from China. The domestic market sales amounted to 1384 billion won, accounting for only 26% of the total sales. Sales in the Chinese market have also more than doubled over the same period. In 2019, sales in China amounted to 106.6 billion won, accounting for 48.9% of the total sales.

POSCO Chemical supplies all three domestic battery companies (LG Energy Solution, Samsung SDI, and SK Innovation). The main focus of this is LG Energy Solutions. It is estimated that annual sales of 200 billion won were generated at the 1st and 2nd factories in Nanjing, China. The Nanjing plant’s capacity is 15GWh.

Sales in the European market have also increased. Last year, sales in Europe were 1163 billion won, a 7-fold increase compared to the previous year (16.6 billion won). LG Energy Solutions’ China plant has a capacity of 70GWh. It is a scale that can produce 2.8 million electric vehicles.

POSCO Chemical has greatly benefited from the emergence of LG Energy Solutions as a global’top tier’ company. When one LG battery is sold, POSCO Chemical is equivalent to taking 30% of the cost. LG Energy Solutions plans to expand the capacity of its Chinese plant from 15GWh to 30GWh and its European plant to 100GWh. As the partnership between the two companies is solid, the increase in sales of LG Energy Solutions leads to an increase in sales of POSCO Chemical.

In addition, as Tesla and Volkswagen started direct production of batteries, POSCO Chemical’s’market’ has expanded from domestic battery companies to overseas automakers. For SK Innovation and LG Energy Solutions, Volkswagen’s battery internalization strategy is the same news as’clear power’, but it means that there is another opportunity for POSCO Chemical. I think this is the advantage of a’small manager’ company.