Faltering EV Markets Test South Korea’s Battery Recyclers
- hanseric
- Apr 16
- 5 min read
Last week, our newsfeeds were buzzing with updates from the Shanghai Auto Show, where no fewer than 271 battery electric and plug-in hybrid vehicles were on display—showcasing everything from karaoke-ready EVs to self-parking SUVs with digital paint and LIDAR-controlled suspension. Around 69% of the models came from Chinese manufacturers, but global automakers are clearly racing to keep pace as the Chinese EV market continues to surge at record speed for yet another year.
In Q1 alone, China sold over 2 million BEVs—a staggering 47.1% increase year-on-year—capturing a 27% share of the passenger car market. Add another 1 million PHEV sales, and the message is unmistakable: China leads global electric mobility, with domestic firms poised for dominance.
In stark contrast, the latest figures from ACEA, Europe’s automotive industry body, paint a less vibrant picture. Vehicle sales in the EU fell by 1.9% in Q1 2025 compared to the same period last year. There is a silver lining for the battery industry: BEV sales grew by 23.9%, reaching 412,997 units and securing a 15.2% market share. This performance is notably stronger than in the U.S., where BEV sales increased by 11.4% to 296,227 units—just 7.5% of the total market. But both still pale in comparison to China and fall far short of the ambitious targets set by policymakers and the industry alike.
The gap between these three regions—which pioneered electric vehicles and were nearly aligned a decade ago—is widening fast. In March, the European Commission bowed to pressure from the automotive industry, softening CO₂ regulations and diluting future EV targets. Meanwhile, in the U.S., the policy outlook is equally uncertain, with tariffs shifting weekly and government support for EVs and charging infrastructure faltering.
For the battery industry and its investors, this divergence is critical—especially in Europe and the U.S. Why invest heavily in markets where demand growth is stagnating?
The stakes are also high for South Korea’s battery giants. While China's CATL and Japan's Panasonic supply cells to many top-selling models in the West, most EVs built in Europe and the U.S. are powered by Korean battery makers—LG Energy Solution (LGES), SK On, and Samsung SDI. All three operate local factories and have ambitious expansion plans. But the dependency is mutual: these cell makers are equally reliant on consistent automaker demand.
This interdependence became painfully clear last year as Europe’s EV sales declined, sending ripple effects through the supply chain. Cell manufacturers were hit hard, along with cathode producers like POSCO, Ecopro, LG Chem, L&F, and Umicore—all of which have their main production bases in South Korea.
So far, 2025 offers only a fragile recovery. LGES posted a 138% jump in profits, but without the Advanced Manufacturing Production (AMP) credits from the U.S. Inflation Reduction Act, the company would still be operating at a loss. Samsung SDI’s losses widened even with support of the credits, while POSCO Future M’s cathode revenues stayed flat, with improved earnings driven mainly by better plant utilization and lower raw material costs.
It’s a brutal reality: even in growing EV markets, profitability for experienced suppliers that have been in the market for decades remains elusive—propped up largely by subsidies.
In Europe, the sluggish rebound in EV sales isn't simply due to a lack of consumer interest—a narrative the industry often prefers to promote. While Volkswagen, Renault, and BMW posted modest gains in volumes in the first quarter, Chinese brands achieved massive growth: SAIC’s vehicle sales in Europe rose 34%, while BYD surged by 335%, despite tariffs. Without these brands and other Chinese-built EVs like Polestar, Zeekr, and Xpeng, Europe-wide car sales would have fallen by 3%, rather than the 0.4% decline recorded.
At the same time, Chinese battery manufacturers like CATL have established themselves as reliable partners to premium brands, while Western automakers are increasingly adopting LFP cathode materials to reduce costs for non-premium models. This trend represents a direct threat to Korean battery and material makers, most of whom are heavily invested in high-nickel chemistries.
For battery recyclers in Europe and North America a weakened Korean position would have major future implications:
Western recyclers have so far focused on a nickel-based battery value chain dominated by Korean producers. But this strategy is under pressure as LFP gains traction and as cell makers shift their cost priorities. As a result, South Korea’s big three are now beginning to produce LFP cells—a significant pivot. This transition means that both processes and business cases for many recyclers may no longer align with future market needs.
For years, Western recyclers have pointed to Korean production volumes to justify forecasts of future scrap availability when pitching to investors. Ironically, these volumes have also been a burden for the cell makers themselves, whose low manufacturing yields have consistently eroded profitability. Efficient scrap recirculation—channeling production waste back into cathode manufacturing—is essential for cost control and long-term viability in both the U.S. and Europe.
Today, almost all recycled battery waste in Europe and the U.S. ultimately flows through Korean material makers, whether for recovery, precursor synthesis, or cathode production. Although it's often claimed that Korean recyclers pay more or that Western capacity is lacking, the real reason is goes deeper: most non-Chinese demand for critical battery materials like sulphates and lithium compounds is concentrated in South Korea.
Just last week, we updated the South Korea section of our Global Battery Recycler Database and took a fresh look at how capacities are evolving. Over the past five years, South Korea’s already well-established battery recycling industry has expanded at an extraordinary pace. There are now more than 20 recyclers in a country that, despite lagging in EV adoption, has leveraged its strengths in advanced electronics and industrial chemicals. The ambitions are high—from both established players and newcomers positioning battery recycling as their next growth engine.
However, many of these announced projects could come under scrutiny in 2025, as the broader battery sector continues its slow climb back to profitability and struggles to stay globally competitive. Even if U.S. tariffs on Chinese batteries give Korean manufacturers a temporary advantage, ongoing uncertainty in the EV market could quickly undermine these prospects. Moreover, reciprocal tariffs on cathode materials—whether from South Korea or Canada—could create additional headwinds, particularly for the energy storage sector.
Meanwhile, in both Europe and the U.S., recycling policy debates remain narrowly focused on keeping materials such as black mass and production scrap within national borders—despite a clear lack of local capacity to reintegrate recovered materials into the battery supply chain. Only last week Ecopro BM suspended plans for a cathode plant in Quebec, and just weeks earlier, China's CNGR abandoned its plans to produce precursors in Finland. In both cases, the combination of weakened demand for nickel-rich cathode materials and global overcapacity undoubtedly played a major role—alongside relentless pressure to optimize production costs.
In today’s increasingly chaotic market landscape—especially after Donald Trump's so-called "Liberation Day" announcements—it's critical to recognize that investing in recycling and midstream battery material production carries significant risks. So too does regulating markets through export bans or artificially favoring recycled or local content. Only because the variables changes so quickly.
At present, only one strong trend is undeniable: the explosive growth of the Chinese EV market, fuelled by the continual introduction of better vehicles and increasingly competitive batteries. For players outside that ecosystem, the best strategy is probably to deploy resources wherever they can be most efficiently utilised—and to collaborate internationally, avoiding the artificial barriers governments sometimes erect in hopes of creating local jobs. If that means shipping material back and forth across borders to achieve global excellence, so be it.
