Battery market Shift: Samsung SDI and SK On Navigate Declining Prices and Shifting Demand
Teh battery manufacturing sector is undergoing a period of adjustment,with both Samsung SDI and SK On experiencing financial headwinds despite overall growth in the electric vehicle (EV) market. While billions were generated from battery sales previously, recent reports indicate a downturn for both companies. Samsung SDI, in particular, reported a important loss of $112 billion in the second quarter, continuing a trend of underperformance.
Both Samsung SDI and SK On enjoyed peak revenue in 2022-2023. As then, revenue has decreased, a situation driven by a combination of factors. A sharp decline in battery prices is a key contributor, but reduced sales volume for both companies also plays a significant role.However, signs of potential recovery are emerging.SK On’s second-quarter report shows improvement, with a 48% increase compared to 2024 and a 31% rise compared to the first quarter of this year, even as prices continue to fall. This positive trend is largely attributed to increased production in North America and substantial financial support received through the U.S.Advanced Manufacturing Production credit (AMPC) program. The company’s overall financial performance was also bolstered by successful operations in petroleum trade and tank terminal management, allowing for consolidated profitability in the second quarter.
Looking ahead, SK On anticipates increased battery sales in Europe during the third quarter. The company is focusing on ramping up production at its BM plant, while scaling back operations at its Komรกrom facility.
Samsung SDI attributes its revenue decline to reduced demand from key automotive customers. However, this explanation is partially offset by the fact that overall EV sales have reached record highs, and those customers are increasingly sourcing batteries from competitors. Samsung SDI is actively working to address this by securing new contracts with major car manufacturers and pursuing negotiations for future business. The company plans to introduce new battery technologies and expand its production of stationary energy storage solutions in the latter half of the year.Samsung SDI is also investing heavily in its Hungarian operations, currently rebuilding and expanding its Gรถd factory.The second phase of the second production unit is under construction, dedicated to producing batteries for Hyundai. Further expansion of the Gรถd facility remains a possibility.
The substantial government support – amounting to hundreds of billions of forints – provided to these companies and their suppliers, alongside significant infrastructure investments, underscores the strategic importance of the battery industry to the Hungarian economy. The success of these investments hinges on Samsung SDI and SK On’s ability to secure new orders and revitalize production within Hungary.
The current situation highlights the dynamic nature of the battery industry, with technological shifts and competitive pressures reshaping the landscape. The future success of these companies will depend on their ability to adapt to changing market conditions and secure a strong position in the evolving EV supply chain.
