The downturn marks a stark contrast to the industry’s boom just two years ago, when major player LG Energy Solution awarded performance bonuses of up to 900 percent of base salaries. Now, those bonuses have dwindled to a mere 50 percent.
Samsung SDI’s battery division recorded no excess profit-sharing last year, while SK On replaced traditional bonuses with a stock-based "value-sharing" program worth about 20 to 30 percent of annual salary.
All three of South Korea’s major battery manufacturers are posting steep losses.
LG Energy Solution and Samsung SDI reported operating losses of 225.5 billion won ($155.6 million) and 256.7 billion won, respectively, in the fourth quarter of 2024. SK On is expected to follow suit when it releases its quarterly earnings on Thursday, analysts say.
The industry's downturn coincides with concerns that U.S. President Donald Trump may dismantle the Inflation Reduction Act (IRA) subsidies, arguing that the EV supply chain disrupts free-market principles.
“The contraction of the electric vehicle market could deal an even greater blow to the battery industry, given its deep reliance on EV demand,” said Cho Cheol, a senior researcher at the Korea Institute for Industrial Economics & Trade.
Amid the crisis, company leaders are working to maintain morale and prevent an exodus of talent. “When crisis strikes, true capabilities emerge. Companies with real competence will dominate when the next super cycle arrives,” LG Energy Solution CEO Kim Dong-myung told employees in a recent statement.
Samsung SDI CEO Choi Joo-sun echoed similar sentiments during a company meeting, saying, “The battery industry will ultimately grow, and if employees stay united with a positive mindset, we will ride the next super cycle.”
Battery manufacturers are implementing cost-cutting measures. SK On and LG Energy Solution have already rolled out austerity programs, with POSCO Future M following suit. Samsung SDI is reportedly slashing expenses across its divisions as it prepares for emergency management.
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