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As sales of electric cars lag expectations, battery materials manufacturers like Umicore and LG Chem are slowing investment in new plants.
Battery materials producers across the globe are hitting the brakes on expansion plans. Umicore, LG Chem, and other firms say that subdued demand for electric vehicles and uncertainty about policies supporting the battery industry are forcing them to pull back.
Umicore executives recently told investors that the company is halving the amount of money it will spend on battery materials projects between 2025 and 2028. CEO Bart Sap said the firm will invest only the minimum amount needed to finish existing projects and meet the commitments it has already made to customers.
“We have invested for years heavily in this business, and we did not produce the returns,” Sap said during a March investor meeting. “So now our job is, with the assets we have, how can we . . . recover as much as possible?”
The cuts are the result of a review process that Umicore started in 2024 when the company realized electric vehicle sales weren’t growing as fast as it had projected. Umicore says it’s canceling a battery cathode plant planned for Ontario and delaying construction of a European battery recycling facility, originally slated to open next year, until at least 2032.
Umicore will continue investing in its cathode plant in Poland and a joint venture with Volkswagen that is building a new cathode facility there. The firm says it will expand an existing cathode plant in South Korea to meet commitments to customers that contracted to buy material from the Canadian project.
Umicore's cuts come after several companies canceled battery cell plants, such as Freyr, Kore, and Northvolt, which collapsed in early March.
Other companies also anticipate a tough path ahead. Ascend Elements announced in February that it was canceling a cathode manufacturing project in Kentucky that had been selected for a $164 million grant from the US Department of Energy. The company will move forward with a plan to produce precursors for cathode materials from recycled batteries at the site. Ascend says it has customers for the precursors but that demand doesn’t justify cathode production right now.
In its February earnings report, the South Korean battery materials manufacturer Posco Future M called the depressed demand and policy unpredictability a “crisis.” CEO Eom Gi-chen promised a "thorough investment review focused on profitability.”
That same day, another South Korean firm, LG Chem, told investors to expect slow revenue growth for battery materials this year. While LG Chem saw cathode sales to customers in North America grow in 2024, the firm says waning government support for electric cars will reduce demand in the future. In early 2024, LG Chem said it was aiming to scale up global cathode production from 120,000 metric tons (t) per year to 280,000 t between 2023 and 2026. Now its target is 170,000 t.
Companies making battery materials in China also face challenging conditions. Firms are producing more cathode and anode materials than battery cell producers need, leading to intense competition and falling prices, according to the Volta Foundation’s Battery Report (2024). As a result, some Chinese firms are trying to set up cathode plants outside of China, where they face less competition.
Cathode materials used to be one of the more profitable parts of the battery industry, but overproduction eroded profit margins in China, says Charlie Parker, founder of the battery industry advisory firm Ratel Consulting and a contributor to the Battery Report (2024). Meanwhile, companies making cathode materials in Europe and North America face big challenges because of high labor costs and stringent environmental regulations, Parker says.
While the coming months may be challenging for materials firms, Parker points out that the battery industry is still growing quickly, and plants that are underutilized today could be needed within a few years. They just need to survive long enough for demand to catch up. “These companies are dynamic,” he says. “Not all will make it, but the nimble ones will make their way through.”
Chemical & Engineering News
ISSN 0009-2347
Copyright © 2025 American Chemical Society
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