LS Securities said on the 5th that with electric vehicle (EV) battery sales expected to stagnate and competition intensifying in the U.S. energy storage system (ESS) market, there are concerns that contraction will continue. It kept its investment opinion at "Hold" and lowered its target price to 531,000 won from 593,000 won. The previous trading day's closing price of Samsung SDI was 607,000 won.
According to LS Securities, Samsung SDI's EV battery sales in April were about 1.6 GWh, down 33% year over year and 27% quarter over quarter. While it is common for April sales to fall from the prior month due to automakers' end-of-quarter push shipments, there are concerns that sales for Jan.–Apr., including April, will be down 33% year over year.
Among the top 12 EV battery sellers, Samsung SDI's market share for Jan.–Apr. fell the most, from 3.1% last year to 2.0% for Jan.–Apr. this year. Even though the share of prismatic batteries is expanding in EVs, Samsung SDI's prismatic battery market share plunged from 12% in 2020 to 2% for Jan.–Apr. this year. The decline is due to intensified competition with Chinese prismatic batteries. A similar trend is appearing in major customers' usage mix, it said.
Jeong Gyeong-hee, an analyst at LS Securities, said, "Adoption of Chinese prismatic batteries is increasing in new models rather than existing ones, and supply of cylindrical batteries to major customer Rivian is expected to stagnate, raising concerns about flat or declining EV battery sales." Jeong also warned that, given the scale of past investments, there is risk of future impairment of EV-directed assets or losses from disposal of property, plant and equipment.
LS Securities assessed that Samsung SDI's narrower loss in the first quarter this year was driven not by improvement in the EV battery business but by strength in non-EV businesses. It cited growing demand for power ESS, uninterruptible power supplies (UPS) and battery backup units (BBU) for artificial intelligence (AI) data centers, and batteries for power tools.
It said the Foreign Entity of Concern (FEOC) rules taking effect this year and higher U.S. tariffs on Chinese batteries are key variables for the U.S. ESS market. However, because Chinese companies are responding in various ways—pre-building inventories before the rules take effect, building plants in the United States, forming joint ventures, and routing exports through third countries—it projected that in 2026 Chinese companies will still command more than a 60% share of the U.S. ESS market. As a result, Samsung SDI's U.S. ESS sales will increase, but the growth pace will likely be slower than the market expects.
Jeong said, "It will be insufficient to fully offset the stagnation in the EV battery business," adding, "Commercialization of solid-state batteries for EVs is taking longer than expected and competition is intensifying, so we did not factor in a premium related to solid-state batteries."
Jeong said, "The market is positioning the battery industry as an AI infrastructure play, and current multiples are similar to the historical upper band reflecting that," but added, "Given weaker-than-expected EV battery sales and the value of assets held by Samsung Display, we are lowering our target price."