South Korean battery manufacturers are gearing up to begin mass production of 46mm diameter cylindrical type lithium-ion batteries in the second half of this year, expecting a significant boost in sales and market presence.
Cylindrical batteries, which consist of rolled-up electrodes and separators stored in a cylindrical can, are preferred by global automakers such as Tesla because they can lower costs through mass production of a few types.
One of S. Korean battery giants, LG Energy Solution, will start mass production of 4680 cylindrical batteries (46mm diameter, 80mm height), known for being preferred by Tesla, at its Ochang plant in August. Excluding Tesla, which manufactures the 4680 batteries itself, LG Energy Solution will be the first major global battery manufacturer to begin mass production.
The cylindrical battery production line at the Ochang plant produces approximately 9 GWh per year, enough to power about 110,000 electric vehicles. LG Energy Solution is also constructing a cylindrical battery plant with a capacity of 36 GWh in Arizona, United States, which will be operational in 2026.
Although the customers for LG Energy Solution’s 4680 cylindrical batteries have not been disclosed, the industry expects that LG will supply them to Tesla and other companies. This is because, despite Tesla producing 4680 cylindrical batteries at its Gigafactory, the yield (ratio of acceptable products) is known to be low.
Ahn Hee-su, an analyst at LS Securities, stated, “On Jun. 8, Tesla announced that it had produced a cumulative 50 million 4680 batteries at the Texas Gigafactory, which means it produces about 120,000 cells per day. However, with a yield still below 20%, reliance on other companies like LG Energy Solution and Panasonic seems inevitable.”
Besides LG Energy Solution, other S. Korean battery makers are also ramping up their efforts in the competition to produce cylindrical batteries.
Samsung SDI is also expected to begin mass production of cylindrical batteries with a 46mm diameter within the year. They are currently negotiating product specifications with several automakers. SK On has also announced plans to develop its existing pouch-type batteries and prismatic and cylindrical batteries.
As S. Korean battery manufacturers are about to begin cylindrical battery production, companies producing related materials are also expected to benefit.
Dongwon Systems, which produces cylindrical battery cans, is expected to start supplying LG Energy Solution in August. In 2021, Dongwon Systems acquired MKC, a cylindrical battery can manufacturer, for 15 billion won ($10.7 million) and invested $50.3 million in 2022 to expand its battery can plant in Asan, Chungcheongnam-do.
Last year, TCC Steel invested $79.4 million to increase the dedicated facilities for nickel-plated steel sheets at its Pohang plant. As a result, its annual production capacity expanded from 80,000 tons to 200,000 tons.
Nickel-plated steel sheets, known for their excellent corrosion resistance and processability, are used to package the exterior of cylindrical cans. Approximately 70-80 grams of nickel-plated steel sheet is needed per 4680 battery.
TCC Steel has been supplying nickel-plated steel sheets for 2170 (21mm diameter, 70mm height) batteries to LG Energy Solution and Samsung SDI since 2009 and is preparing to supply the upcoming 4680 batteries as well.
Dongkuk Steel, specializing in cold-rolled special steel, invested about $63.2 million starting in 2022 to set up a manufacturing line for nickel-plated steel sheets with an annual capacity of 80,000 tons. Dongkuk Steel will start production in September and supply samples to customers. Full-scale mass production is expected to begin next year once they receive approval.
