Competition between Korean and Chinese battery corporations targeting the European electric-vehicle battery market is expected to intensify. China's CATL, the world's No. 1 battery corporation by market share, is speeding up its push into Europe as it decided to build a third plant there. Korea's three battery corporations—LG Energy Solution, Samsung SDI, and SK On—have EV battery plants in Europe.
When CATL's battery plant in Europe begins mass production, automakers that have contracts with the three Korean battery corporations could shift part of their orders to CATL. That is because automakers have recently been seeking to diversify battery supply sources. However, Korean battery materials corporations with plants in Europe will get a chance to secure a new customer in CATL.
According to foreign media and the battery industry on the 7th, the CATL–Stellantis joint venture held a groundbreaking ceremony for a battery plant in Aragon, Spain, on the 26th of last month (local time). CATL plans to produce lithium iron phosphate (LFP) batteries for EVs with an annual capacity of 50 gigawatt-hours (GWh) at the plant. The output, enough to supply about 700,000 to 1 million EVs, will begin partial operation at the end of 2026 with completion targeted for 2028. CATL and Stellantis will invest €4.1 billion, and the European Union (EU) is expected to provide €300 million in support.
CATL is already operating one plant in Europe and building another. The CATL Germany plant, with a capacity of 14 GWh, began producing EV batteries at the end of 2022. The 100 GWh plant under construction in Debrecen, Hungary, will start battery production early next year. On top of that, the corporation decided to build a plant in Spain.
CATL is expanding its European plants because Europe is the last EV market that Chinese corporations can target. By size, China is No. 1 in the global EV market, Europe is No. 2, and the United States is No. 3.
China's EV market is already dominated by Chinese battery corporations such as CATL. The U.S. market is out of reach for Chinese corporations. Since President Donald Trump took office, the U.S. government has imposed hefty tariff on Chinese corporations. That is why Europe is considered the last remaining market.
Conversely, Korean battery corporations have little choice but to focus on Europe's EV market. Entering the Chinese market is difficult for political reasons, and demand in the U.S. EV market has slowed as the Trump administration halted EV subsidies.
◇ The three battery makers on edge over CATL's moves, materials makers see opportunity
CATL's aggressive moves are a threat to the three Korean battery corporations that have been focusing on Europe. LG Energy Solution is in Wroclaw, Poland; Samsung SDI is in Göd, Hungary; and SK On is in Komárom and Iváncsa, Hungary, with EV battery plants in Europe.
This decision took into account that automakers' EV plants are located not only in Germany but also in Eastern Europe, where labor costs are lower. However, once CATL's plants in Hungary and Spain start operating, the geographic advantage held by the three Korean battery corporations will disappear.
Above all, some of the output allocated to the European plants of the three Korean battery corporations could shift to CATL. When it announced plans in 2022 to establish its Hungary plant in Debrecen, CATL said, "It is close to customers' car plants such as Mercedes-Benz, BMW, Stellantis, and Volkswagen."
The customers CATL mentioned overlap significantly with those of the three Korean battery corporations. The main customers of LG Energy Solution's Poland plant are Volkswagen, Ford, Renault, and Volvo. The main customers of Samsung SDI's Hungary plant are BMW, Volkswagen, and Stellantis, and the main customers of SK On's Hungary plant are Ford and Volkswagen.
A battery industry source said, "It is hard to find an automaker that is not a CATL customer, as most EV brands use CATL batteries," adding, "As EV supply grows, automakers tend to sign contracts with multiple battery companies, so some volume from Korean battery makers could be siphoned off."
However, industry opinions converge that the timing of full-fledged competition with CATL in Europe depends on whether CATL's Hungary plant, which will begin mass production early next year, can settle quickly. To operate a plant in Europe, companies must not only hire local European talent but also use Europe's battery supply chain in line with EU environmental regulations. It also took considerable time for the three Korean battery corporations to achieve production yields at their European plants comparable to those in Korea.
An industry source said, "CATL has produced batteries in China that the world recognizes, but the situation in Europe could be different," adding, "If it overcomes changes in workforce, regulations, and the supply chain and succeeds in early stabilization, CATL's strength will be undeniable, but we still need to wait and see."
Another source said, "LG Energy Solution and Samsung SDI have been operating plants in Europe since 2018, and SK On since 2020, and they have successfully settled," adding, "We need to watch a bit longer to see whether CATL can successfully run its 100 GWh plant in Hungary."
While the three Korean battery corporations in Europe will compete with CATL, Korean battery materials corporations such as EcoPro are expected to benefit. As long as Europe's EV market grows, they can secure CATL as a customer as well as the three Korean battery corporations. Reflecting this, battery materials corporations have recently begun to make a full-fledged push into the European market.
Solus Advanced Materials is operating an EV copper foil (battery foil) production base in Hungary. On the 26th of last month, Solus Advanced Materials said it signed a contract to supply 20,000 tons of copper foil with a top-10 Chinese battery company. Production will begin at the end of 2026, with full-scale mass production starting in 2027.
LOTTE Energy Materials is building a copper foil plant with an annual capacity of 30,000 tons in Catalonia, Spain. Completion is targeted for the second half of 2027. SK nexilis is also nearing completion of a copper foil plant that broke ground in Poland in July 2022.
EcoPro held a completion ceremony on the 28th of last month for a cathode materials plant in Debrecen, Hungary, with an annual capacity of 54,000 tons (t). EcoPro BM, EcoPro's cathode materials subsidiary, will begin producing high-nickel ternary cathode materials for ternary batteries at the Hungary plant starting next year. The production volume is enough to supply about 600,000 EVs. EcoPro BM then plans to expand its lineup to mid-nickel and LFP cathode materials to meet customer demand.
Joo Min-woo, an analyst at NH Investment & Securities, said, "Although Chinese cathode makers are entering Europe, it is difficult for domestic battery makers to rely 100% on Chinese cathodes," adding, "EcoPro BM, the only company operating a local plant in Europe, could benefit."