LG Energy Solution’s $10.7 Billion IPO And Its Probable Impact

The successful completion of LG Energy Solutions’s $ 10.8 billion IPO in South Korea values the battery maker at about $59 billion makes it the third largest listed firm on the Korean Kospi index, behind electronics giant Samsung and Hynix.

The successful IPO signals just how large, and tough, the future of the battery business is going to get for smaller firms. In a decade where easy liquidity and covid disruptions have turned the big is better maxim to the big get bigger among firms, LG Energy is set to challenge the no 1 player CATL more strongly, even as players behind it will struggle to keep up.

The success of the IPO, despite the poor publicity from the recall of 73,000 Bolt EV’s from GM indicates just how much larger investors expect the market to be. In fact, interestingly, the only other IPO bigger than the LG Energy IPO is the one by electric-truck startup Rivian Automotive, which completed a $13.7 billion listing in the U.S. in November.

LG, with its manufacturing plants South Korea, China, Poland and the U.S. has been focusing on the US market in particular, as auto makers there shift to EV’s faster than anticipated.

Like elsewhere in the auto components space, battery makers have gone into JV’s with auto majors across the world to set up plants, with the battery major usually owning the majority stake.

Asia dominates the list of top 3 or 5 or even 10 battery makers worldwide currently, with the top 3, CATL (32% ), LG Energy (21.5%) and Panasonic (14.7%) accounting for close to 70% of the market. The world’s no. 1 EV manufacturer, Tesla, used to source its batteries exclusively from Panasonic ( and its NCA chemistry) until its China launch, when it leaned on LG Energy (NCM 811 chemistry) and CATL (LFP Chemistry) too. Interestingly, CATL might be primed for taking the lead here too, as its LFP chemistry based batteries deliver on their promise of lower cost performance.

While that obviously makes the battle tougher for ‘smaller’ players like BYD (China), Samsung SDI (South Korea) and SK Innovation 9South Korea), it is clear that these firms will also have access to funding and domestic support on an unprecedented scale. Fears in the US and Europe of a market dominated by Chinese battery makers means a welcome mat for the Korean and  Japanese firms to set up plants there.

Homegrown US startups like Quantumscape are betting big on solid state batteries (batteries which donot use a liquid electrolyte) to drive down costs as well as dependence on rare metals like Lithium. With a valuation that is within distance of LG Energy Solutions, success for Quantumscape and its solid state offerings seems to be the best option to make the long term battery market more open and maintain a trajectory of dropping costs. Sodium ion batteries is another possibility, where we saw India’s Reliance acquire UK based Faradion last month