South Korean battery makers have begun tightening their belts to weather a tough year.

Declining electric vehicle sales in 2024 and expectations of further deterioration as Donald Trump returns to the White House have South Korean battery makers looking for short-term cost savings. Most often, in such a situation, employees of all levels, including management, become victims of savings. This time, too, no exceptions were made.

Samsung SDI headquarters. Image Source: Samsung SDI

Strictly speaking, the company began to use the emergency mode in one form or another last summer, and it even bore fruit. Therefore, there is fresh experience of saving and it was decided to expand it with the beginning of the new year, as each of the heads of leading South Korean companies said in their New Year’s greetings. They all motivated their employees to be prepared for the challenging business environment in 2025, and encouraged them to look forward to the improvements that could come with 2026.

Thus, on January 2, Samsung SDI employees were informed that the Overall performance incentives (OPI) bonuses for achieving annual targets this year were canceled for the battery division and office workers. This bonus, in a greatly reduced form – up to 3-5% of the annual salary – will be left only to employees developing advanced materials. Last year, for example, the amounts of this bonus were respectively 32%, 28% and 18% of the annual salary for the above departments.

Samsung SDI avoided introducing anti-crisis measures for the longest time, but at the beginning of this year it gave in under the pressure of circumstances.

As part of cost-saving measures, LG Energy Solution (LGES) issued an order back in December ordering management to fly economy class if the travel time is less than eight hours. The rest of the employees were advised to hold teleconferences and not spend money on travel, which, by the way, is considerable. The company spends at least $68 million (100 billion won) on them every year. LGES subsidiary LG Chem advised employees not to forget about annual leave, reduced bonuses and stopped recruiting.

SK On went even further and introduced the practice of early voluntary retirement, which it had never used before in its history. It also began offering unpaid leave to employees in September last year. Separately, the SK Innovation division eliminated two of its five senior management positions and appointed a veteran former SK Hynix R&D head to head production. About 20 years ago, the Hynix company experienced a serious crisis in the field of computer memory production, and the survival experience gained then will be useful to the modern generation of managers.

Analysts associate the beginning of savings, among other things, with probable losses of companies in the fourth quarter of 2024. Official data will begin to arrive only at the end of January, so all announced indicators should be taken as indicative.

Thus, both LGES and SK On are expected to incur operating losses in the fourth quarter of 2024, while Samsung SDI suffered an operating loss from its electric vehicle battery business for the first time in three years. LGES’ operating loss is expected to be 258.4 billion won ($176 million), which is worse than the market forecast of 118 billion won ($80.7 million). SK On’s operating loss for the same period is expected to be around 200 billion won ($136.7 million). Samsung SDI suffered an operating loss from its battery business, but its quarterly operating profit fell to 5 billion won ($3.4 million), down 99% from a year earlier.