Enchem, the leading electrolyte manufacturer in Korea, is strengthening its global market strategy in North America and Europe despite losses. In the United States, it is increasing supplies of energy storage system (ESS) products, while in Europe and China, it aims to boost supplies for electric vehicle batteries, expecting a rebound in performance.
Electrolyte is considered one of the four essential materials for batteries, along with cathode materials, anode materials, and separators. The electrolyte acts as a substance that allows lithium ions within the battery to move freely between the cathode and anode, stabilizing the surfaces and enhancing battery life and performance.
According to industry sources on the 12th, Enchem is expanding its production of lithium iron phosphate (LFP) battery electrolytes in North America. With increasing demand for LFP batteries used not only in electric vehicles but also in ESS, supplies to joint ventures like LG Energy Solution and General Motors (GM) are on the rise. This year, Enchem is expected to supply approximately 13,000 tons (t) of electrolyte for ESS. Next year, this figure is estimated to increase by more than 360% to 60,000t.
When it was established in 2012, Enchem was a latecomer in the electrolyte market, but now it has the largest production capacity in Korea. In the global market, it fluctuates between the 3rd and 4th places, with all of its competitors being Chinese companies. In addition to LG Energy Solution, it counts SK On, Tesla, and Panasonic as major clients, and there is speculation about the potential for collaboration with China's CATL.
Enchem holds the top market share in North America and has focused on local production since its entry in 2019, primarily centered around its Georgia plant. The annual production capacity of the Georgia plant is about 105,000t, with plans to expand it to 150,000t by the end of this year and to 200,000t by next year. Additional production facilities will be operated in Tennessee (250,000t), Indiana (250,000t), and Ontario, Canada (250,000t).
Among domestic battery material corporations, it is also the only company receiving benefits from the U.S. Inflation Reduction Act (IRA) in the form of advanced manufacturing production credits (AMPC). It is expected to receive over 17 billion won this year following 16.2 billion won last year. AMPC is a subsidy paid to corporations producing batteries and solar power in the U.S. The electrolyte produced by Enchem has been recognized as an item subject to AMPC, specifically 'active materials for electrodes.'
It is also expanding its presence in the European electric vehicle battery market. Currently, it operates production facilities in Poland and Hungary and plans to begin supplying to a large-scale battery plant in France starting at the end of this month. In Dunkirk, France, there are plans to build a plant with an annual production capacity of approximately 135,000t, aiming for completion next year.
Despite ongoing losses due to sluggish electric vehicle market conditions, there are expectations that profitability will recover once supply expansion in North America and Europe gains full momentum. At the end of last year, Enchem reported an operating loss of 65.3 billion won, shifting from a profit of 3 billion won in 2023 to a loss, with a first-quarter loss this year amounting to 19.2 billion won. The net loss for last year was 571.2 billion won, more than ten times larger than the previous year's net loss of 50.1 billion won.
The demand for electrolytes used in batteries is consistently increasing. The estimated usage of electrolytes is about 1,000t per 1 gigawatt hour (GWh) of battery capacity. According to market research firm SNE Research, the demand for electrolytes, which was about 1.42 million tons last year, is projected to rise to 4.46 million tons by 2034, with an expected annual growth rate (CAGR) of approximately 11%.