"Korea set its investment strategy on the view that the energy storage system (ESS) market would open only after the electric vehicle market grew. But as EV demand cooled, the ESS market opened earlier than expected. Because investment centered on EVs, domestic corporations inevitably responded late."
Professor Kang Gi-seok of Seoul National University's department of materials science and engineering diagnosed it this way, saying in a recent interview, "As the industry's market forecast in Korea missed the mark, the response to the ESS market was delayed." While the EV market slowed, ESS emerged as a new growth axis, but Korean battery corporations are failing to pick up speed compared with overseas competitors such as Tesla in the United States and BYD in China. Kang said, "In the ESS market, price competitiveness will likely determine success or failure," and emphasized, "We need to pave a breakthrough for Korea's battery competitiveness through safety and lifetime prediction technologies."
Kang is a world-renowned authority in the field of lithium secondary batteries. He currently heads the Secondary Battery Innovation Research Center at Seoul National University, leading research on next-generation battery technologies such as high-nickel cathode materials. Kang said he recently conducted policy research commissioned by Korea Development Bank to overcome the crisis in the secondary battery industry. Kang said, "China is pressuring Korean corporations through structural price advantages secured by large-scale government subsidies and the provision of equipment and land, along with control of supply chains," adding, "The government must realign technology, policy, and supply chain strategies to maintain global competitiveness." The following is a Q&A.
What is the essence of the battery industry crisis.
"In fact, the battery market is growing. But because China takes most of it, we don't feel it. The second cause is overproduction; both Korea and China are unable to run their facilities fully, so fixed-cost burdens are high. In China, the government provides land and facilities for free and has seized the supply chain to lower prices. China expanded its domestic market (creating an optical illusion) and increased its share in Europe. In contrast, Korea's market share in Europe fell from 70%–80% to below 50%, raising alarm. Korea will have an advantage once the U.S. market opens. For now, the key in this endurance contest is who collapses first."
What is the core of your policy proposals to overcome the crisis.
"The core is to shift from the current indirect support to direct investment to help the industry survive. First, switch the government's investment strategy (differentiate between large corporations and small and midsize enterprises); second, build infrastructure (bolster domestic demand); third, enact a special law for secondary batteries; fourth, stabilize supply chains (sovereign wealth fund); fifth, create a one-team patent portfolio."
Why do you think government support should shift to direct investment now.
"In the past, during rapid growth, tax benefits alone were enough, but now subsidies are needed; however, because subsidies require profits to qualify, they are not being used. Support should be differentiated for large corporations and small and midsize enterprises (materials and equipment). Large corporations have focused production facilities overseas due to investments in the United States, reducing their capacity to research next-generation technologies such as solid-state batteries. Support is needed for this. SMEs are distributed across regions such as Ochang, Pohang, and Saemangeum, so direct support is essential in terms of initial investment, balanced regional development, and employment."
What infrastructure should be built to revitalize domestic demand in the battery industry.
"Korea is an export-oriented country, but the current EV penetration rate is among the lowest in the world. To survive the "endurance contest" with China, domestic demand must underpin it. There are many charging stations, but the ratio of fast chargers is low, and regional imbalance (overconcentration in Gyeongsang Province) is a problem. First, we should link ESS to the national power grid plan to create demand. As in China, if we mandate linkage of solar and wind power with ESS and institutionalize centralized procurement at all times, private investment will follow. We must push steadily so policies don't sway as they did in 2018."
Why is a special law needed now.
"A special law for secondary batteries is essential to prevent a structure in which the market fluctuates with policy directions. Like the Semiconductor Special Law and the Hydrogen Act, stable support becomes possible. It is ironic that in 2025 the secondary battery market has surpassed memory semiconductors, yet there is no special law. Hydrogen has a much smaller market size, but the budget is at a similar level, and there is a law. Existing laws such as the National Core Technology Act are centered on minerals and semiconductors and are in a haphazard state, so integration is needed."
How can a sovereign wealth fund be used to strengthen competitiveness in the ESS industry.
"The price of secondary batteries is determined by materials (lithium, nickel, cobalt, manganese). Through its "Made in China 2025" plan (released in 2015), China seized overseas mines (14 of 19 cobalt mines in Congo, most nickel mines in Indonesia). Since a single corporation cannot shoulder this, we need to set a long-term plan with a sovereign wealth fund to secure supply chains. Even now, if we stabilize supply chains by investing in nickel and cobalt mines, we will gain price competitiveness. This applies equally to ESS supply chains and can reduce vulnerabilities across the industry."
What patent strategy should be used.
"Korea holds 64,000 patents in secondary batteries, currently No. 1. The golden time is five years. Korea once overtook Japan with NCM (nickel, cobalt, manganese) technology after Japan's patents expired. China detoured with LFP (lithium iron phosphate), but it is being held back from entering the premium market (NCM). Because the portfolios of Korea's three companies (LG Energy Solution, SK On, Samsung SDI) complement one another exquisitely, there is no room to wedge in. If the government forms a "one-team" consortium, we can block China's response. Korea alone is a country that has all of the global automakers, battery makers, and materials corporations, and we must make the most of that."
Can ESS be a mainstay for our corporations.
"Concerns about Chinese batteries have delayed EV policies in the United States, but the ESS market has grown instead. The U.S. power grid is vulnerable, and as demand from artificial intelligence (AI) data centers increases, the battery farm market is expanding. Based on the five policies mentioned above, if we strengthen ESS domestic demand and supply chains and endure for two to three years, the market will recover. Unlike the EV market, price competitiveness is overwhelmingly important in the ESS market. Korea must seek differentiation through technical performance, especially in safety and long life. Given the distrust of Chinese products, safety can be a powerful competitive edge for Korean batteries. Reusing EV batteries after their initial life is a promising follow-up business model and an important resource for the ESS market. The accuracy of lifetime prediction directly translates into battery sale prices and business economics. It is also important to prevent cell makers from using Chinese materials and to support domestic materials companies' research and development (R&D) and initial investments through policy support such as a sovereign wealth fund so they do not go under. If the domestic materials ecosystem collapses, dependence on China will deepen and ultimately weaken price bargaining power."