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The Korea Herald
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THE INVESTOR
October 16, 2024

Automobiles

EcoPro founder returns to work, tasked with surviving EV chasm

  • PUBLISHED :September 10, 2024 - 16:37
  • UPDATED :September 11, 2024 - 09:56
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EcoPro’s former Chairman Lee Dong-chae (EcoPro)

EcoPro’s former Chairman Lee Dong-chae has returned to management after a yearlong hiatus, at a critical time when the battery materials maker and the entire EV industry are reeling from slowing demand.

According to the company on Tuesday, Lee was recently named an executive adviser on the board following a presidential pardon granted last month. He had been serving prison time for insider trading since May last year.

It remains to be seen when Lee could be reinstated as chairman, but expectations are already high for the company’s founder and largest shareholder to contribute to speeding up stalled talks on key investment decisions and the ongoing search for new growth engines.

Last week he invited the top two executives of China’s GEM, Chairman Xu Kaihua and Vice Chairman Wang Min, to the EcoPro headquarters in North Chungcheong Province to further cement business ties with the world’s second-largest precursor manufacturer.

Upon the visit, the two companies agreed on forming a joint supply chain for cathode used in electric vehicle batteries in Indonesia where EcoPro will secure cheap nickel from GEM’s nickel smelting plant that annually produces 150,000 tons of the key raw material for cathode.

The strategic partnership is expected to dramatically cut costs in manufacturing nickel-based cathode materials for nickel, cobalt and manganese, or NCM, batteries. According to EcoPro, cost competitiveness in nickel is crucial because it takes up more than 40 percent of the production costs of these batteries

EcoPro Materials, EcoPro’s subsidiary in charge of manufacturing precursor -- a base material for cathode -- will also acquire a stake in GEM’s Indonesia plant to enter the nickel smelting business as well as secure nickel that meets the criteria of the US Inflation Reduction Act. EcoPro already acquired a 9 percent stake in the production base in March.

“Without disruptive innovation, there can be no breakthrough in the (EV) chasm. Based on the 10 years of trust with GEM, we will set up a one-stop value chain ranging from smelting raw materials to manufacturing precursor and cathode in Indonesia,” said Lee in a statement.

During a recent in-house conference with executives and staff, Lee once again stressed the importance of competitive pricing in NCM batteries against the cheap lithium iron phosphate (LFP) batteries mostly made in China.

Lee noted that Korean companies have boosted the production capacity of NCM batteries, but they started to lose market share due to the extended dominance of China’s LFP batteries, leading to the EV slowdown.

“Industrial convergence is the only path we shall take. I agreed with Xu to complete setting up the joint value chain in 2025 after laying the groundwork this year,” said Lee.

By Byun Hye-jin  (hyejin2@heraldcorp.com)

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