SEOUL — South Korea's battery exports witnessed a decline of 1.6 percent in 2023, marking the first decrease in seven years, the Ministry of Trade, Industry and Energy announced on Sunday. This downturn reflects a broader slowdown in electric vehicle (EV) demand, which has impacted the country's previously booming battery export sector.
According to Yonhap News Agency, the total value of South Korea's rechargeable battery shipments dropped to $9.83 billion from the $9.98 billion recorded in 2022, the first on-year decline observed since 2015. This reversal comes after a period of sustained growth, where exports had consistently risen, surpassing $5 billion in 2017 and maintaining an upward trajectory through 2022.
The trade surplus in the rechargeable battery sector also experienced a significant contraction, falling to $900 million in the last year from a peak of $5.83 billion in 2019. This reduction is attributed partly to an increase in battery imports from China, indicating a shift in the trade dynamics for South Korea's battery industry.
Further impacting the export figures is the strategic move by South Korean battery manufacturers to enhance their overseas production capabilities rather than expanding domestic facilities. This decision is driven by the desire to capitalize on local tax incentives offered in key markets. The country's three leading battery companies — LG Energy Solution, SK On, and Samsung SDI Co. — have notably increased their production footprint in the United States and Europe, aligning their operations closer to the end markets and benefiting from favorable tax policies.
This shift towards international production and the broader context of slowing EV demand globally presents new challenges for South Korea's battery industry, which had previously enjoyed robust growth and a strong export performance. The government and industry stakeholders are now faced with navigating these changing market conditions to sustain growth and competitiveness in the global battery sector.