LG Energy Solution, Samsung SDI and SK On, South Korea's three battery makers, are expected to simultaneously re-enter a loss-making phase. The slowdown in electric vehicle demand has lowered plant utilisation rates, and cancellations of existing contracts have sharply increased fixed-cost burdens.

LG Energy Solution posted an operating loss of 122 billion won in preliminary fourth-quarter results. Daishin Securities said the underlying operating loss widened to 464 billion won excluding 332.8 billion won in AMPC compensation. Utilisation was bound to fall as EV pouch volumes declined due to the disappearance of U.S. EV subsidies. Profitability in ESS was temporarily weak as related costs were deferred amid production disruptions stemming from detention incidents in Georgia.

Samsung SDI's fourth-quarter results, based on estimates by Hanwha Investment & Securities, missed the consensus, with revenue of 3.7 trillion won and an operating loss of 396.8 billion won. Weak demand from major European customers such as BMW and Audi continues, and the recovery in the automotive battery business is expected only after 2027, the analysis said. BMW launched a new platform, but it initially uses China's 46 series, and Samsung SDI's market share is trending lower.

SK On's fourth-quarter shipments are expected to fall 13 percent from the previous quarter. Hanwha Investment & Securities said U.S. sales plunged 40 percent quarter-on-quarter. As it also dissolved its joint venture relationship with Ford's BlueOval SK, SK On's consolidated global production capacity fell 28 percent to 238 GWh from 330 GWh.

Risks linked to GM are also coming into focus. Daishin Securities said it is unclear whether Ultium Cells plants 1 and 2 will operate as GM scales back its EV business. That is adding to growing uncertainty over 2026 EV pouch performance, alongside a series of order cancellations including Ford's 109 GWh and FBPS' 19 GWh.

Anxiety over the battery industry is enough to draw in the government. Industry Minister Kim Jung-kwan (김정관) was reported to have said at a recent closed-door meeting with battery industry executives that he had doubts about the three-company battery structure. The meeting was the first case of Kim urgently convening battery industry management since taking office.

Participants were reported to have formed a consensus that the structure of joint ventures with local automakers needs to be reviewed in response to slowing U.S. EV demand. SK On's case of dismantling the BlueOval SK structure in the United States was cited as a model.

Global ESS expansion offers hope...Supply-chain reshuffle away from China is an opportunity for Korean firms

ESS is at least a breakthrough for the battery industry this year. Hana Securities said new global ESS installations in 2025 rose 49 percent from a year earlier to 314.0 GWh. Key drivers were responses to power volatility from renewable generation and growing electricity demand from AI data centres. As of December, the power grid segment, accounting for 92 percent of new installations, recorded growth of 178 percent in Europe and 135 percent in China.

LG Energy Solution's ESS order backlog recently topped 120 GWh, including an order from KEPCO for 1.4 GW. Daishin Securities said that was an increase of more than 70 GWh from the first half. Order momentum is expected to continue as it benefits from an early-mover effect as a non-Chinese LFP ESS producer in the United States. Still, it will likely take time for profitability to normalise as initial line-conversion costs are reflected for the time being.

Samsung SDI began full-scale shipments of NCA ESS for its Stellantis joint venture from the fourth quarter. Hanwha Investment & Securities estimated shipments at about 1 GWh. The LFP ESS line, expected to start operating in the second half of 2026, is emerging as virtually the only growth driver. With the recovery in the automotive battery business delayed, expanding the ESS share is key to improving results.

Still, it is a burden that LFP batteries account for 96 percent of the ESS market, forming an oligopolistic structure. Given ESS characteristics that require long life, safety and cost competitiveness, securing competitiveness is a task for Korean firms centred on high-nickel products. Yuanta Securities analysed that the ESS business would be assessed by orders in the first half of 2026 and by results in the second half.

From the 28th, results to be released in turn by the three firms, with conference calls a watershed

Supply-chain reshuffling away from China is also an opportunity for Korean battery makers. Nikkei Asia said U.S. battery manufacturers are switching their supply chains from China to South Korea. Hana Securities said LFP accounted for 96 percent of new ESS installations in December, but that it is difficult to receive AMPC if foreign companies use licences from overseas firms that fall under prohibited foreign entities, and it analysed that the ESS market share of Korean cell makers in the United States will continue to rise.

The robot battery market is also gaining attention as a new growth driver. Samsung SDI shares rose more than 14 percent on the 22nd on expectations for its robot-dedicated battery business. As Hyundai Motor and Kia expand physical AI-based humanoid robot business, the move is also having a positive impact on battery industry partners such as Samsung SDI. Samsung SDI signed an agreement in February last year with Hyundai Motor and Kia's Robotics Lab to jointly develop robot-dedicated batteries. The two sides are pushing to develop high-performance batteries with higher energy density in forms optimised for limited spaces.

Starting on the 28th with SK On, the three battery makers will release results sequentially. LG Energy Solution is scheduled for the 29th, and Samsung SDI for Feb. 2. Whether they will disclose plans for high-intensity restructuring such as sales of non-core assets and workforce reductions will be a focus on the conference calls.