Korean hybrid-car battery makers boost investments

South Korean makers of batteries for hybrid electric vehicles (HEVs) are rushing to increase their capital spending in an effort to secure a spot in the rapidly growing global market.

Aggressive investment by LG Chem Co., Samsung SDI Co., SK Energy Co. and similar firms is also timed with Hyundai Motor Co.'s launch of South Korea's first HEV in July. Market watchers are expecting its release to be a catalyst for the embryonic local industry.

"The launch of the Avante LPI Hybrid will help expand the HEV battery market in South Korea. But the market is forecast to grow at a modest pace as it will take a while for the hybrid car to be popular," said James Park, an analyst at Hyundai Securities Co.

HEVs are powered by both batteries and fuel, and achieve better fuel economy than conventional vehicles, substantially reducing air pollution. LG Chem plans to spend 1 trillion won (780 million dollars) to build an HEV battery plant by 2013 with the aim of increasing its global market share to over 20 percent. The company also plans to build a plant in the United States to provide batteries to U.S. automaker General Motors Corp.

GM's plug-in hybrid electric car, the Chevrolet Volt, will come equipped with LG Chem's lithium-ion polymer battery beginning in November 2010. The Volt is a plug-in hybrid electric vehicle (PHEV), which has batteries that can be recharged when connected to a power outlet.

In June 2008, Samsung SDI, the world's third-largest producer of rechargeable batteries, signed a deal with Germany's Bosch Corp., the world's largest supplier of automobile components, to set up a 50-50 joint venture called SB LiMotive. The company is scheduled to start commercial production of HEV batteries in 2010. SK Energy, Korea's top refiner, has been increasing its investment in HEV battery development. "We are planning to start mass production of lithium-ion polymer batteries starting 2011," said Hong Gyeong-pyo, a spokesman for the firm.

Last January, the refiner broke ground for a 159-billion won (124 million dollars) plant to produce lithium-ion battery separators (LiBS), a key material in HEV batteries, starting June 2010.

Japan has led the global HEV battery market since the mid 1990s, but South Korea has been at its heels since 2000, according to data by LG Chem. The global HEV battery market is expected to grow to 10 trillion won in 2015 from 1 trillion won (780 million dollars) in 2010, with the number of HEVs rising to 4.6 million units from 950,000 units.

Source : Yonhap News, by Nam Kwang-Sik, June 25th, 2009