Batteries, as key components of the broader renewables industry, have become a daily topic of conversation among policymakers and businesspeople, supercharging competition and mobilizing ever greater investments, to a degree that perhaps only the race for the development of artificial intelligence is comparable to in today’s global markets.
The primary competitors and market leaders in this field are located in East Asia. China serves as the dominant force when it comes to its ownership of valuable critical minerals supply chains, and refining and battery manufacturing facilities, but South Korea and Japan are increasingly present as critical players in the energy transition. South Korea solidified its status as a leading battery and EV producer, and is home to three of the world’s top ten companies in the field: LG Energy Solution, SK On, and Samsung SDI. Seoul is also a prominent investor in both American and European gigafactories and it is a notable exporter of clean energy technologies.
China’s dominance, however, has not been without its own structural vulnerabilities. While firms such as BYD remain industry bellwethers, a number of fast-rising battery manufacturers, including energy storage specialist Xiamen Hithium Energy Storage Technology Co, have pursued aggressive, subsidy-backed expansion strategies at home and abroad. These dynamics foreshadow financial pressures that are now emerging not only in China, but across the region.
South Korea’s battery industry faces its own distinct challenge of striving for too much too soon – not a unique problem amid the breakneck speed of expansion of the global battery industry, but one that policymakers and business leaders still must contend with.
The deployment of government subsidies, intensifying rivalry between corporations, and heavy dependence on foreign supply chains – primarily those in China’s area of influence – harken back to the excesses of past industrial booms in South Korea. The 1970s saw the rise of the country’s shipbuilding industry which – in addition to suffering from a lack of capital and poor technical skills initially – expanded rapidly and was marked by high capital intensity, overborrowing, an overreliance on government funding, and significant external market risks.
Today’s battery industry operates under similar circumstances in South Korea. Seoul is rolling out a five-year plan that will mobilize $29 billion worth of investment, loans, insurance and other means of financial support for the country’s battery industry. The impact of such investments are already visible: South Korea is the second-largest battery producer in the world, with a 20% market share globally. On the other hand, however, Seoul relies on China for more than 90% of its cathode materials and graphite, and over 80% of its lithium, creating a daunting dependency on its competitor.
In contrast to the billions of dollars spent in investment, LG’s workers have repeatedly protested over low wages and safety issues in factories, and the recent scandal involving the US immigration authorities’ raid on a Hyundai-LG factory in the state of Georgia point highlighted further irregularities.
A more general problem appears to be financial overstretch, which has affected SK On as well. Its years-long history of investment rounds amounting to billions of dollars and all aimed at accelerating SK On’s global expansion came at the expense of weakening confidence in the sustainability of its model, and a consequent downgrading of its ratings outlook by S&P in 2022. The conglomerate’s restructuring efforts are ongoing in 2025, aiming to counteract the overinvestment of preceding years. The debt-to-equity ratio of SK Innovation rose from to nearly 170% in 2023, from 117% in 2019. A general slowdown in the demand for EVs and South Korea’s reduced production capacity vis-à-vis China’s are also responsible for the financial maladies of top producers, but analysts agree that corporate investment policies must be adjusted first.
South Korea is not the only country that is impacted by the financial overstretching. Indeed, in China, where government subsidies and handouts have been the largest globally, a number of leading battery producing firms struggle to stay competitive and profitable. Previously noted Hithium Energy Storage Technology is an example, from among the biggest in the Chinese battery market, with similarly ambitious investments abroad, including a $200 million assembly plant in Texas, a cooperation plan with Saudi Arabian Alfanar Projects for the construction of 4GWh energy storage facility, and similar projects with Solarpro in Bulgaria and Hungary.
Yet, financial strains appear to be catching up with Hithium, and quickly. The Chinese government has substantially increased the number of subsidies disbursed to the company, having allocated 334 million RMB in the first half of 2025, on track to double the figures from 2024, indicating a company struggling financially. Hithium’s trade receivables turnover days add up to nearly 230 days in 2025, casting the long shadow of deficits. This is combined with the company’s missing out on several high-value tenders inside China’s Xinjiang province over the past few months also indicate that the downtrend may continue.
This is an important consideration for investors too, who are questioning the company’s solvency. As Hithium is applying yet again to be listed on the Hong Kong Stock Exchange, having already been rejected by regulators, balance sheets primarily buttressed by government subsidies have proven insufficient to mobilize capital. This is a challenge that South Korean companies are also facing in light of their financial troubles and recent reputational damages impacting their workforce.
South Korea’s battery champions have built an industry that powers the world’s green ambitions, but their breakneck expansion is beginning to show the strain. Debt is mounting, margins are narrowing, and the drive for scale is starting to resemble the industrial bubbles of Korea’s past. If Seoul and its corporate giants continue to chase capacity at the expense of stability, they risk turning a technological success story into a financial cautionary tale.
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