Cracks are emerging in the electric-vehicle battery industry, with reports that SK On and Japan’s Nissan have entered a full review of a battery supply agreement said to be worth about 15 trillion won. The move highlights structural uncertainty in a market long described as a growth sector, as demand shifts collide with heavy investment burdens.
The review is rooted in a slowdown in the EV market. As global automakers adjust production plans, battery demand is weakening faster than expected. Nissan, amid signs it is moderating the pace of its EV strategy, is reported to be reexamining the contract’s terms and scale. The development suggests broader demand forecasts across the industry are becoming less reliable, not merely a routine negotiating issue.
Battery makers are also under growing strain. SK On is making large-scale facility investments while continuing to run at a loss. Long-term supply contracts premised on expanding capacity are meaningful only if demand holds. If the market moves differently than expected, investment commitments can quickly become financial risk. The contract review reflects that reality.
The issue extends beyond a single company. Across the global battery sector, companies have been slowing investment, delaying plant construction and renegotiating contract terms. A softer demand growth rate, cost pressures and changes in subsidy policies are converging, testing the limits of an industry built on speed and expansion.
For years, the battery business has been driven by a race for scale — how quickly and how much capacity could be secured. That approach is now being reassessed. With demand uncertainty rising, aggressive expansion can become a liability, making changes to growth strategies increasingly unavoidable.
Relations between automakers and battery suppliers are also shifting. Where carmakers once moved early to lock in long-term deals out of concern about shortages, they are now more likely to scrutinize conditions and revisit terms, signaling a subtle change in leverage.
For South Korea’s battery industry, the SK On-Nissan review is a warning that strategies focused mainly on expanding size may no longer be sustainable. The sector remains a growth industry, but the yardsticks are changing — balance over speed, and profitability over sheer scale.
* This article has been translated by AI.
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