EcoPro Group has established a three-pronged breakthrough strategy spanning the short to long term in response to slowing demand for electric vehicle battery materials. The key pillars are expanding non-EV cathode material production (short-term), local European manufacturing (mid-term), and raw material self-sufficiency in Indonesia (long-term). Core affiliate EcoPro BM saw its second-quarter earnings decline year-over-year but managed to stay in the black, and market attention is now focused on whether these three strategies will translate into an actual earnings recovery.

Business Structure and Closed Loop

According to EcoPro's official website, the company is a business holding company encompassing secondary battery material affiliates including EcoPro BM (cathode materials) and EcoPro Materials (precursors). It has built the 'Eco Battery Pohang Campus' in the Yeongilman Industrial Complex in Pohang, integrating production facilities for precursors, cathode raw materials, and process gases. The company has laid out a blueprint to extend its domestically proven closed-loop ecosystem overseas by combining its Indonesian raw material supply chain with European production bases.

Short-Term: Non-EV Demand as the First Signal

The first change reflected in earnings is the expansion of non-EV demand. According to a report by Hankyung TV, EcoPro BM recorded consolidated revenue of KRW 576.7 billion and operating profit of KRW 18 billion in the second quarter of 2026. While revenue fell 26% and operating profit dropped 63.2% year-over-year, the company maintained profitability.

Even as volumes for European and North American EVs declined, cathode material volumes for power applications such as power tools and e-bikes increased 28% compared to the previous quarter. EcoPro BM's official company introduction lists energy storage systems (ESS), uninterruptible power supplies (UPS), smart grids, and batteries for aerospace, medical, and military applications as cathode material application markets beyond EVs. However, the actual revenue scale and growth rate of each market require separate verification.

Mid-Term: Hungary Factory as the Key Marker

The mid-term variable is the Hungary plant. Edaily reported that EcoPro BM aims to respond to local European demand through mass production at its Hungary plant and to expand cathode material supply in connection with AI data center expansion. Local production is significant for customer responsiveness and shortened supply lead times, but the actual earnings contribution depends on the plant's utilization rate, customer orders, and the pace of recovery in the local EV market.

However, AI data center demand cannot yet be definitively labeled as EcoPro's new core market. What has been confirmed so far is the 'possibility' that demand for non-EV batteries, such as those for power tools and UPS, will increase alongside the expansion of AI semiconductor production facilities and data centers. Whether demand and revenue of a scale sufficient to fully offset the sluggishness in EV cathode materials have already materialized is difficult to ascertain based solely on publicly available data.

Long-Term: Restructuring Profitability Through Nickel Internalization

The long-term strategy is raw material internalization. According to reports by Hankyung TV and Edaily, EcoPro BM plans to increase its self-procurement ratio of nickel, a core cathode raw material, through its investment in the BNSI nickel smelter in Indonesia. The company explained that profits from nickel production could be reflected starting from the second quarter of 2027, when the smelter begins operations.

Nickel internalization is a strategy that goes beyond simply securing raw materials; it aims to reduce dependence on raw material prices, exchange rates, and external supplier procurement conditions while vertically integrating precursor-to-cathode production. According to EcoPro Materials' official introduction, the company not only produces precursors but has also been directly refining and producing nickel and cobalt metals since 2021. The Pohang Campus has an annual precursor production capacity of 50,000 tons, serving as the upstream stage for EcoPro BM's cathode production.

Three Strategies, Different Timelines

Whether EcoPro will rebound cannot be judged solely on EcoPro BM's quarterly revenue. In the short term, it is necessary to assess how much non-EV volumes, such as power applications, offset the decline in EV demand. In the mid term, attention should be paid to whether the Hungary plant's utilization rate and local European orders expand. In the long term, the focus should be on what changes the BNSI smelter brings to raw material procurement costs and group profitability.

What has been confirmed so far is that EcoPro BM maintained profitability in the second quarter despite slowing EV demand, and that non-EV volumes increased compared to the previous quarter. On the other hand, the specific earnings contribution from the Hungary plant and the Indonesian smelter remains at the verification stage. Going forward, the key to evaluating EcoPro will be whether the timelines of these three strategies connect to actual numbers. Rather than simply waiting for an EV industry recovery, the next checkpoint will be whether plans to shore up short-term earnings with non-EV demand and to transform the profit structure through European local production and raw material internalization are reflected in revenue and profit.

[※ This article covers corporate and secondary battery material industry trends and does not recommend buying or selling any specific stock. Investments in overseas plants and smelters may yield varying results depending on operational schedules, raw material prices, and customer demand. Investment decisions and responsibilities rest solely with the investor. This article was written with AI assistance.]