South Korea’s top three battery makers are expected to reach 1,000 trillion won ($749 billion) in combined order backlogs by the end of this year, according to government estimates, thanks to the tax credits applicable under the U.S. Inflation Reduction Act.

LG Energy Solutions Ltd., Samsung SDI Co. and SK on Co. had a combined 775 trillion won in their order backlogs at the end of 2022, according to the Ministry of Trade, Industry and Energy and battery industry sources on Wednesday. Backlog refers to the total value of customer orders received but have not yet been produced or delivered.

“It‘s most likely that the order backlog at the three battery makers will exceed 1,000 trillion won by the end of this year,” said one official from the ministry, following its estimate based on the end-2022 backlog. This is the first time that the government has released its own estimates and outlook on the battery industry.

Industry insiders say that LG Energy Solutions will have the largest backlog, followed by SK on and Samsung SDI. LG Energy Solutions has already secured 385 trillion won in orders, the company said during an earnings conference call at the beginning of the year.

“SK on has 300 trillion won and Samsung SDI has some 100 trillion won in their orderbooks at the moment,” said a battery industry insider. Aggressive efforts by LG Energy Solution and SK on to form joint ventures have helped to grow their orders. Their combined backlogs are far above the combined production capacity of all Korean battery makers together by 2030, even on the assumption that all production lines are in full operation.

A race to mass production seems to be inevitable following large order logs.

LG Energy Solutions, the country’s No. 1 battery maker, is reportedly facing challenges in securing sales, even as it reporting bigger operating profits thanks to subsidies in the U.S. SK on is also in a similar situation. SK on did not reflect the production tax credit in its operating profits in the first quarter. It is unclear whether it will include it in the second quarter, the company said.

By Song Min-geun and Chang Iou-chung

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