Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.A number one South Korean producer of electrical automobile batteries has declared itself in disaster as its prospects battle with disappointing EV gross sales in Europe and the US.SK On, the world’s fourth-largest EV battery maker behind Chinese language giants CATL and BYD and South Korean rival LG Vitality Answer, has recorded losses for 10 consecutive quarters since being spun off by its mother or father firm in 2021. Its web debt has elevated greater than fivefold, from Won2.9tn ($2.1bn) to Won15.6tn over the identical interval, as western EV gross sales have fallen far in need of its expectations.With losses snowballing, chief government Lee Seok-hee introduced a collection of cost-cutting and dealing observe measures final Monday, describing them as a state of “emergency administration”.“We have now our again in opposition to the wall,” Lee wrote in a letter to workers. “We must always all pull collectively.”Extra radical options are additionally being mentioned inside the South Korean SK Group conglomerate. One choice into account, in keeping with an individual conversant in the conglomerate’s pondering, is that SK On’s mother or father, SK Innovation, will likely be merged with SK E&S, the group’s extremely worthwhile power affiliate that specialises in liquid pure fuel manufacturing. The potential merger is about to be mentioned on the board degree this month.SK On has made a collection of aggressive investments within the US and Europe lately, betting on a broadly predicted growth in demand for EVs. Nonetheless, it has since introduced prolonged lay-offs for staff at its plant within the US state of Georgia and delayed launching a second plant in Kentucky, a three way partnership with its principal US buyer Ford.Chinese language producers CATL and BYD dominate the worldwide battery business with a mixed market share of 53.2 per cent, in keeping with South Korea-based consultancy SNE Analysis. Their manufacturing and gross sales are nonetheless concentrated in its home market, the place EV adoption has been a lot higher than in western international locations.With Washington and Brussels looking for to stop a flood of imported batteries from China, South Korean makers LG, SK and Samsung SDI — together with Japan’s Panasonic — have been given the chance to seize future development in western markets.Within the US, non-Chinese language battery makers together with SK On have benefited from billions of {dollars} in subsidies beneath President Joe Biden’s Inflation Discount Act.However Tim Bush, a Seoul-based battery analyst at UBS, mentioned the South Korean battery makers had been “badly let down” by US automotive producers, which he mentioned had failed to provide EVs sufficiently engaging to mass market customers to satisfy their very own bullish gross sales projections.He famous that till as just lately as final yr, Common Motors was forecasting it will promote 1mn EVs in 2025. It bought simply 21,930 within the second quarter of this yr.“The Korean battery makers haven’t been making blind investments — every part they invested was based mostly on order books with fastened volumes and pricing,” mentioned Bush. “However the automakers didn’t make investments sufficient in producing high-quality inexpensive EVs.”RecommendedAnalysts mentioned SK was in a worse place than South Korean rivals LG and Samsung SDI, each of which have additionally pared again their investments, as a result of as a late entrant to the worldwide battery race, it had supplied its prospects beneficiant phrases on pricing that have been now coming again to hang-out it.However Bush argued that whereas electrical automobile adoption had proved slower than anticipated, the transition to EVs remained “inevitable”.“So long as the broader SK Group continues to see SK On as a trophy asset and offers it the help it must climate the current storm, then its long-term future is prone to be assured,” he mentioned.