Secondary Battery Industry Analysis 2026 — After the Battery Chasm, ESS Leads the Recovery

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Secondary Battery Industry Analysis — Is Samsung SDI’s Turnaround a Signal for the Whole Industry?

After confirming through DART filings that Samsung SDI had swung back to profit for the first time in seven quarters, I found myself wondering whether that was a company-specific rebound or a sign that the entire secondary battery industry is emerging from the “battery chasm.” So I pulled the DART financial statements of Korea’s leading cell makers and materials companies alongside market data from SNE Research and others to take a fresh look at the industry as a whole.

This article sets out to answer three questions: first, is the battery chasm triggered by slowing EV demand genuinely coming to an end; second, is the position of Korea’s top three battery makers (LG Energy Solution, Samsung SDI, SK On) eroding as Chinese players like CATL and BYD expand their share; and third, is ESS (energy storage systems) a solid enough new growth axis to stand in for EVs. The analysis draws on DART’s 2025 annual reports and 2026 semiannual reports, along with SNE Research and other market data.

Secondary Battery Industry Overview — A USD 188.87B Market Growing Roughly 18% a Year

Secondary batteries are rechargeable batteries used across EVs, ESS, and small IT devices. The value chain runs from four core materials — cathode, anode, separator, and electrolyte — assembled into battery cells, which are then built into modules and packs for use in finished vehicles and ESS systems. According to market researcher Mordor Intelligence, the global secondary battery market is estimated at USD 188.87 billion in 2026 and is projected to grow at a CAGR of 18.31% through 2031, reaching USD 437.79 billion. On a volume (GWh) basis, Shinhan Investment data shows global demand growing from 1,352 GWh in 2024 to roughly 2,086 GWh in 2026.

According to SNE Research, global EV battery usage reached 352.7 GWh in the January-April 2026 period, continuing to grow year-over-year. That said, a large share of this growth is being captured by Chinese manufacturers — a point that stings for the Korean industry.

Secondary Battery Market Structure — China’s Combined 54.3% Share and Korea’s Position

In the global EV battery market for January-April 2026, CATL held a commanding 40.1% share with 141.4 GWh (YoY +19.8%), while BYD held onto second place with 50.0 GWh (14.2%). The two Chinese firms’ combined share reached 54.3%, cementing a market structure in which Chinese manufacturers now capture more than half of the global battery market. Among Korean firms, LG Energy Solution held on to third place with 32.0 GWh, but SK On’s share fell from 4.3% to 3.5% on volume of 12.3 GWh, and Samsung SDI managed only 5.3 GWh. The visible erosion in the combined share of Korea’s top three is the most sobering fact to reckon with in assessing this industry.

That said, Korean companies’ strength lies in the vertical integration of the materials value chain beyond cell supply to automakers. EcoPro BM, Korea’s largest cathode-material specialist, holds a technology edge in high-nickel NCA and NCM cathodes, while POSCO Future M is the only Korean company producing both cathode and anode materials simultaneously — a differentiator tied to POSCO Group’s upstream vertical integration into minerals such as lithium and nickel. Independent of the share decline in the finished-cell market, I believe Korean companies’ technological competitiveness at the materials level remains intact.

Secondary Battery Key Company Comparison — Two Cell Makers, Two Materials Makers (DART, FY2025)

Company 2025 Revenue 2025 Operating Profit Operating Margin Core Competitive Edge
LG Energy SolutionKRW 23,671.8BKRW 1,346.1B5.7%World’s No.3 cell maker; multiple North American JVs with GM, Hyundai, and others
Samsung SDIKRW 13,266.7B-KRW 1,722.4B-13.0%World No.1 in small batteries; developing 46-pi and solid-state cells (returned to profit in H1 2026)
EcoPro BMKRW 2,531.6BKRW 143.3B5.7%Korea’s largest cathode-material specialist, focused on high-nickel NCA/NCM
POSCO Future MKRW 2,938.7BKRW 32.8B1.1%Only Korean company producing both cathode and anode materials; backed by POSCO Group’s mineral vertical integration
2025 Revenue and Operating Margin Comparison Across Key Secondary Battery Companies (DART, Consolidated)

LG Energy Solution’s revenue scale (KRW 23,671.8B) dwarfs the others, but the standout in 2025 operating margin was materials maker EcoPro BM at 5.7% — effectively tied with LG Energy Solution — while cell maker Samsung SDI was the only one of the four to post a loss, at -13.0%. What’s particularly interesting is that even LG Energy Solution, despite a positive operating profit of KRW 1,346.1B in 2025, posted a net loss attributable to controlling shareholders of -KRW 1,072.8B, and its operating profit itself turned negative again in H1 2026 at -KRW 94.5B. In other words, it’s too early to read Samsung SDI’s 2026 turnaround as a sign of an industry-wide recovery — the gap between individual cell makers’ results remains wide. POSCO Future M, by contrast, has a lower operating margin (1.1%) but has kept revenue (KRW 2,938.7B) solidly steady, suggesting materials businesses may carry relatively lower earnings volatility than cell makers.

Secondary Battery CAPEX & New Business Trends — 46-Pi, Solid-State, and Dedicated ESS Lines

Industry-wide CAPEX is shifting its center of gravity away from expanding prismatic and pouch lines for automakers and toward next-generation products and dedicated ESS lines. Samsung SDI is building a 46-pi (46mm-diameter) cylindrical-battery line at its Göd plant in Hungary, with initial investment estimated at around KRW 1 trillion. Both LG Energy Solution and Samsung SDI are developing solid-state batteries targeting mass production around 2027, each running pilot lines at domestic R&D centers. At the same time, both companies are expanding dedicated ESS production sites in response to rising U.S. data-center power demand — a shift I read as the industry reprioritizing toward projects with shorter payback periods and clearer demand visibility than automotive CAPEX. Materials companies are following the same trend, continuing to invest in next-generation materials such as high-nickel cathodes and silicon anodes.

Secondary Battery Industry Key Trends & Risks

✅ 3 Growth Drivers

① Rapid growth in the ESS market
Rising AI-data-center power demand combined with expanding renewable energy is set to grow the U.S. ESS market from 90 GWh in 2025 to 160 GWh by 2030. With lower demand volatility than EVs, ESS is becoming a new safety net for the industry.

② Signs of a European EV market recovery
European EV sales are expected to recover in the second half of 2026, which has the potential to translate into higher European volumes for Korean cell makers.

③ Benefiting from de-China supply-chain realignment
As the U.S. and Europe tighten regulations on Chinese-made batteries and materials, Korean companies with North American production capacity and non-Chinese supply chains stand to benefit relatively.

⚠️ 3 Structural Risks

① Intensifying low-cost competition from China
With CATL and BYD’s combined share at 54.3%, Chinese manufacturers’ price-led expansion continues to erode Korean cell makers’ market share.

② U.S. policy and tariff uncertainty
Changes to IRA tax-credit (AMPC) policy and tariff issues remain variables that could directly affect the profitability of Korean companies with heavy North American production exposure.

③ Uneven profitability and an uneven recovery across companies
Samsung SDI turned profitable in H1 2026 while LG Energy Solution swung to an operating loss in the same period — it’s too early to call the recovery uniform across the industry.

My Investment Perspective on the Secondary Battery Industry

The secondary battery industry appears to be passing the trough of the battery chasm, but the recovery isn’t showing up uniformly across the sector. Samsung SDI’s return to profit in H1 2026 is encouraging, but LG Energy Solution swung to an operating loss in the very same period, and CATL and BYD continue to expand their global share. I think it’s important to be cautious about extrapolating one company’s earnings rebound into an industry-wide turnaround.

Two themes stand out to me. First, ESS — a segment with lower demand volatility than EVs and structural growth backed by AI data centers — deserves priority attention, particularly companies where ESS revenue is a growing share of the mix. Second, materials companies like POSCO Future M, which produce both cathode and anode materials with mineral vertical integration behind them, have shown a steadier earnings profile independent of the share battle in the finished-cell market, and are worth watching closely.

The triggers that would change my view are these: ① if both major Korean cell makers (LG Energy Solution and Samsung SDI) sustain profitability from Q3 2026 onward, confirming an industry-wide rebound, I would consider increasing exposure to the sector as a whole. ② Conversely, if CATL and BYD’s share keeps expanding and the combined share of Korea’s top three continues to erode, I would maintain a more selective approach centered on materials and ESS value-chain companies rather than the Korean cell makers themselves.

⚠️ Investment Disclaimer

This article is an individual investor’s analysis based on DART electronic disclosure filings and does not constitute investment advice.
All investment decisions must be made at your own judgment and responsibility.
Stock investing carries the risk of principal loss.

References

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