Battery giants face skills gap that could block the electric highway

SEOUL (Reuters) – The South Korean battery giants powering many electric vehicles around the world face a skills shortage that could dampen the global race to zero-emission transport.

The country’s three major players, which control a third of the global electric vehicle (EV) battery market, told Reuters they are all grappling with a shortage of research and engineering specialists as demand for technological balloons.

LG Energy Solution (LGES), SK On and Samsung SDI Co Ltd all rank among the world’s top six battery manufacturers and supply Tesla Inc, Volkswagen and Ford Motor Co. among others.

Yet they face increasing demands from the major automakers and cannot find enough technicians with the necessary training to continue advancing advanced technologies such as solid-state batteries.

“Although we are seeing such growth in the industry, it appears that we are facing a talent shortage,” said an LGES official. “It is crucial to recruit external talent as well as nurture our own talents. “

This was echoed by its two big domestic rivals, SK On calling the expansion of the sector “exponential”.

Indeed, the global battery industry has doubled in size over the past five years and South Korea is short of nearly 3,000 graduate positions in fields such as research and design, according to the most recent data. recent reports from the Korea Battery Industry Association, dating from late 2020. LGES, SK On and Samsung SDI currently have a total of approximately 19,000 employees.

The Korean crisis reflects a growing talent shortage in a larger global battery market that IHS Markit forecasters will triple to nearly $ 90 billion by 2025.

The EU’s European Battery Alliance planning group, for example, says “retraining / skills upgrading” is needed in the bloc because its battery industry needs 800,000 new workers. by 2025.

If the global skills gap is not closed, some industry experts believe it could slow the pace of progress in batteries, which are relied on to clean up road transport, one of the biggest sources of gas emissions. Greenhouse effect.

“The demand for talent in the battery industry exceeds supply, and battery manufacturers are keen to ensure that they have this small group of people who can work on this technology and will not be left behind. in the rapidly growing market, ”said Samsung. Securities analyst Cho Hyun-ryul.

‘COMPETITIVE PACKAGES’

In a sign of the pressure on skills, LGES – the largest battery maker in South Korea by volume – plans to launch a new “smart factory department for batteries” at the prestigious Korea University next spring with guaranteed jobs. for graduates.

More immediately, executives flew to the United States to conduct school recruiting events. The CEO of LGES and his managers visited Los Angeles last month while the CEO and staff of SK Innovation hosted an event in San Francisco on Saturday.

These companies not only compete with other established Asian players including market leader CATL in China and Japan’s Panasonic, but also with fast-growing US and European rivals like Sweden’s Northvolt who are bridging the technology divide.

South Korea’s talent shortage is compounded by the displacement of some existing employees to overseas competitors who had offered better wages, according to two industry sources with knowledge of the matter. They declined to be named due to the sensitivity of the matter.

Northvolt, which counts Volkswagen among its customers, previously said some of its employees have been recruited from top battery makers, including LGES and Panasonic.

“We have a few people working for Northvolt who are from South Korea, which is obviously a very impressive country in terms of battery manufacturing and development with several well-respected companies active in this space,” a spokesperson told Reuters. word of the company. the week.

“We try to offer competitive packages to our employees – everyone who works here is a shareholder in the company for example”, he added, without however specifying the details of the remuneration.

Battery specialists in South Korea who recently graduated with a doctorate can earn up to 100 million won ($ 85,000) per year, and those without this level of qualification average around 80 million won. after gaining a few years of experience, according to two major sources. South Korean battery companies.

South Korea’s average annual salary was 37.4 million won in 2019, according to data from the tax agency.

“WIN FOR AMERICAN CARS”

The Korean sector has also been mired in an internal dispute, with LGES and SK Innovation, which owns 100% SK On, locked in a two-year dispute over technology, trade secrets and staff poaching until April of this year, when they settled their differences.

As a sign of the global importance of the two conglomerates, US President Joe Biden – who has made strengthening electric vehicles a top priority – described the regulation as “a victory for American workers and the American auto industry.”

“We need a strong, diverse and resilient US-based electric vehicle battery supply chain,” he added.

Even in the face of the growing skills gap, global demand for their products has spurred the expansion plans of battery manufacturers.

LGES expects its production capacity to reach 155 gigawatt hours (GWh) of batteries by the end of this year and plans to increase it to 430 GWh by 2025, which could power around 7.2 million electric vehicles. .

SK Innovation aims to more than five times its annual production capacity to 220 GWh by 2025 and last week announced plans to invest 10.2 trillion won with Ford to build three battery factories in the United States.

Richard Kim, senior analyst at IHS Markit, said the skills gap is likely to be a problem for years to come.

“The shortage of labor in the battery industry is already a global problem, and the reality is that there has been an imbalance between the supply and demand for labor while many companies are starting to increase their capacity, ”he added.

($ 1 = 1,184.4,000 won)