South Korea’s leading battery manufacturers are bracing for a sharp decline in operating profits for 2024. LG Energy Solution, the nation’s largest battery maker, is projected to report an operating profit of approximately 698.4 billion won ($533 million) for the year, just a third of its 2023 total of 2.16 trillion won. Samsung SDI’s annual operating profit is expected to fall to around 769.2 billion won, marking a 50% drop from its 2023 figure of 1.63 trillion won. SK Innovation, including its battery subsidiary SK On, is forecast to see its 2024 profit shrink to 213.6 billion won, down significantly from 1.9 trillion won the previous year.
Without subsidies provided under the U.S. Inflation Reduction Act (IRA) for local production, analysts warn that South Korea’s battery manufacturers could face operational losses in 2024. Battery material firms are also under pressure. EcoPro BM, once the market cap leader on South Korea’s KOSDAQ, is expected to swing from a net profit of 295.2 billion won in 2023 to an estimated loss of 40 billion won for 2024.
The downturn highlights a broader crisis in South Korea’s electric vehicle (EV) and battery ecosystem, which had been a key growth driver even during the global semiconductor slowdown. According to financial data provider FnGuide, the combined operating profit of the nation’s top 10 battery-related firms is forecast to plummet by more than half—from 11.94 trillion won in 2023 to 4.98 trillion won in 2024. Excluding IRA subsidies, seven of these companies are expected to operate at a loss.
A sharp decline in domestic EV demand has further deepened the industry’s struggles. South Korea’s five major automakers—Hyundai, Kia, GM Korea, KG Mobility, and Renault Korea—sold 91,385 EVs in the domestic market in 2024, a 21.2% drop from 115,900 units in 2023. This marks a stark reversal from the rapid growth seen between 2020 and 2022, when EV sales nearly tripled.
Globally, automakers are scaling back EV investments, while restructuring efforts are intensifying across the battery sector. Northvolt, Europe’s largest battery manufacturer, filed for bankruptcy in late 2024, sending shockwaves through the industry. The bankruptcy is expected to have ripple effects; for instance, L&F, which had secured significant contracts with Northvolt, is now projected to see its losses double due to a sharp decline in orders.
South Korean battery giants, which collectively secured over 1,000 trillion won in orders, are delaying investments and implementing emergency cost-cutting measures. POSCO Future M, for example, has drastically scaled back plant operations to minimize losses.
Adding to these challenges is the emergence of Chinese EV manufacturers like BYD, which is set to enter South Korea’s passenger car market in 2025. This has raised concerns about further erosion in domestic EV demand.
Geopolitical headwinds are also compounding the industry’s woes. The return of a Trump administration in the U.S. is expected to bring higher tariffs and increased pressure for local vehicle production, including EVs, which could strain South Korean automakers and their supply chains.
“Hyundai and Kia are likely to expand their production in the U.S., but declining domestic demand will severely impact parts suppliers and the broader industry,” said Lee Hang-gu, a researcher at the Korea Automotive Technology Institute (KATECH).
Lee also emphasized the urgency of addressing the rising dominance of lithium iron phosphate (LFP) batteries, a technology led by Chinese manufacturers. LFP batteries are projected to account for 40% of the global EV market by 2030, further intensifying competition.
