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Secondary Battery Touted as Next Growth Engine

Posted September. 10, 2009 08:27,   


Michigan has fallen as the center of the world’s auto market due to the global economic crisis, but could recover its past glory through secondary batteries and an eco-friendly auto industry that uses them.

Michigan Gov. Jennifer M. Granholm told a recent radio address that she wants to make her state the advanced battery capital of the world.

As countries present green growth as a means to overcome the economic downturn, corporate competition is intensifying to take the lead in the production of secondary batteries used in electric cars.

In Korea, secondary battery manufacturers are gaining ground on the stock market. Securities experts say secondary battery manufacturing, along with information technology, and automobiles, will emerge as a core industry for Korean companies to earn high profits.

○ Secondary batteries boost stocks

Many analysts call the secondary battery industry the next megatrend for the stock market. This means this new industry is different from other short-lived boom items. Optimism over the industry is fueled by the stellar performances of Korean companies.

The trailblazer is LG Chem. The company clinched a deal with General Motors early this year to supply lithium ion batteries to the U.S. automaker’s electric car Chevrolet Volt. LG also won a contract last month to supply the batteries to Buick models from 2011.

Samsung SDI and Robert Bosch GmbH of Germany created a joint venture to make hybrid electric vehicle batteries and will exclusively provide them to BMW until 2020.

On the stock market, the secondary battery has become a core leading item. Samsung SDI soared to 165,000 won (134 U.S. dollars) yesterday, up three times from 55,000 won (45 dollars) at the end of last year. LG Chem’s shares also tripled over the same period from 71,000 won (58 dollars) to 212,000 won (173 dollars).

Cho Yong-jun, head of research at Shinyoung Securities, said, “After stocks in IT and car companies soared, investors are seeking a new breakthrough in the secondary battery industry, which has long-term growth potential.”

Shares of secondary battery companies are also surging on the tech-laden KOSDAQ market.

○ Race for secondary battery dominance

Industry experts expect that secondary batteries will nullify existing technology and bring innovation to all industries. As cars running on batteries gain ground, a major shift is expected in refinery and energy-related industries.

Anticipating such a trend, Berkshire Hathaway Chairman Warren Buffett last year bought 10 percent of the Chinese electric car maker BYD.

International competition over secondary battery manufacturing is set to evolve into one among countries. The U.S. and Japanese governments have announced huge spending into the development of cutting-edge batteries. China has begun resource diplomacy to secure lithium, the core battery material, by financing construction in Bolivia, which has the world’s largest lithium reserves.