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By Nam Hyun-woo
Chinese electric vehicle (EV) battery makers are stepping up efforts to win more orders from global carmakers taking advantage of the legal battle between Korea's LG Chem and SK Innovation over patent infringement, according to industry officials, Tuesday.
They said the battery makers' competition to win deals from automakers has been intensifying, and the Korean rivals' "game of chicken" will end up benefiting others such as China's BYD, CATL and Japan's Panasonic.
According to multiple overseas news reports, world No. 3 battery maker BYD is close to a supply deal with Audi to provide batteries for its upscale EVs, expected to hit the market in 2021.
Audi has been closely working with LG Chem, Samsung SDI and SK Innovation for its e-tron electric SUV and other vehicles, but seems to be diversifying its supply chain to Chinese battery makers as Korean firms face constraints.
Chinese firms' expansion is also noticeable in the energy storage system (ESS) market in Japan. According to local newspapers, world No. 1 EV battery maker Contemporary Amperex Technology Ltd. (CATL) of China will join forces with Japanese solar power firms to roll out stationary battery units for home and industrial use in 2020.
BYD also plans to supply batteries to Japanese firms and plants by 2021. In May, BYD made an entry into Korea's ESS market.
Analysts said this expansion will gain momentum as the legal battle between the world No. 4 LG Chem and No. 9 SK Innovation may unravel their bids to secure greater shares of the global battery market.
"The two firms' battle is to protect their respective intellectual properties and market share, which are important from a corporate point of view," said Lee Byung-tae, a professor at the Korea Advanced Institute of Science and Technology's College of Business.
"However, the two companies could have used their resources and energy for greater innovation in their products, which can bring about a greater market share. Such a legal battle will adversely provide opportunities for Chinese companies to expand faster."
According to market tracker SNE Research, BYD's global EV battery market share in the first five months of the year stood at 15.2 percent, up from 10.2 percent during the same period last year earlier. CATL also saw a sharp market share increase to 25.4 percent from 21.5 percent.
LG Chem's share slightly increased to 10.8 percent from 9.6 percent, and SK Innovation's share also inched up to 2.1 percent from 0.9 percent. Samsung SDI's share backpedaled to 4.9 percent from 6 percent.
LG Chem and SK Innovation have been in a legal battle since April this year, when the former filed suits with the U.S. International Trade Commission (USITC) and a U.S. court against the latter claiming it stole confidential business information through employee poaching.
Stoking their battle, SK Innovation last week announced retaliatory patent infringement lawsuits against LG Chem for allegedly violating patents on rechargeable batteries.
Their legal battle is expected to end with an import ban on one of the company's batteries and an operational setback in the U.S. LG Chem is running a battery plant in Holland, Michigan, while SK Innovation is constructing a plant in Georgia with a plan to begin commercial production in 2022.
Despite concerns from analysts and the Korean government that their dispute will only undermine the country's technological competence in the global battery market, the two companies are exchanging rhetorical salvos demanding each other to apologize.
"The two firms' dispute appeared to be a competition to secure greater market share, but it is bound to block one company's sales in the U.S. market," said an employee at a Seoul-based battery maker, who declined to be named. "Such a clash will create greater chances for Chinese firms or Japan's Panasonic to increase their shares in the global market."
