Demand for Tesla Model Y boosts battery sales from LG Energy Solutions, Korean company becomes top seller in May

The power equation in the battery supply chain changed in May, with South Korea’s LG Energy Solutions dethroning China’s CATL as the company with the most installed capacity.

What happened: LGES’ installed base increased 270% year-on-year to 5.7 Gigawatt-hours in May, according to a report by market research firm SNE Research. The Korean company’s market share rose from 25.8% to 28.7%.

LGES’ growth was primarily driven by strong sales of Chinese-made Tesla Model Y, Volkswagen ID.4 and Skoda ENYAQ vehicles, the report said.

In comparison, CATL’s installed capacity increased by 259.4% to 4.8 GWh, giving it a 24.5% share of the overall market.

Total installed battery capacity worldwide was 19.7 GWh in May, more than 3.3 times higher than in 2020, according to SNE.

data released Previously by SNE Research, CATL showed in the first four months of 2021, selling 21.4 GWh of capacity, an increase of 285.09% year-over-year.

LGES was in second place, selling 14.2 GWh of battery capacity in the first four months of the year.

Related link: Apple in talks with Tesla supplier CATL for battery delivery deal: Report

For the January-May period, global battery capacity was 81.6 GW, nearly 2.7 times higher than the same period of the previous year. CATL led the pack and was followed by LEGS.

Why it’s important: The battery is the most important part of an EV, as it accounts for about 30% of the cost. The Chinese market offers huge potential for EV companies and, moreover, these companies have their sights set on expanding abroad.

This factor will work in favor of Chinese battery makers such as CATL and Warren Buffett-backed BYD Company Limited (Pink: BYDDF).

Against this background, LGES’ performance in May is commendable.

LGES is a spin-off unit of LG Chem, with the parent company planning to eventually market it as a publicly traded company. The move was intended to increase finances to fuel LGES’ expansion.

Related link: Tesla battery supplier LG Energy Solution wins favorable verdict in legal dispute with SK Innovation

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