Stocks of South Korean electric vehicle battery manufacturers have been on a sharp rise for the past few weeks because of hopes that their business may turn around faster than expected on the back of favorable state policies and rising demand for eco-friendly vehicles, industry sources said Saturday.

Stocks in top player LG Chem Ltd. have surged more than 40 percent since June, topping 400,000 won ($353) on expectations of rapid growth in the market for medium and large-sized batteries. It closed at 401,000 won on the Seoul bourse Friday, down 1.47 percent from the previous session's close.

"LG Chem's battery business will continue to be re-rated in the future thanks to its massive investment and improving performance," said Son Young-joo, an analyst at Kyobo Securities.

LG Chem, also the country's top chemical firm, already logged an operating income of 7.5 billion won on sales of 1.12 trillion won from its battery business during the second quarter of the year.

Samsung SDI Co., a unit of top conglomerate Samsung Group, saw its stocks more than double this year to close at a record high of 214,500 won Friday. "Its EV battery business is expected to turn around in the near future, and demand for EV batteries will continue to rise," said So Hyun-chol, an analyst at Shinhan Investment Corp.

SK Innovation Co., a latecomer to the EV battery market, closed at 189,500 won Friday, down from a record high of 197,500 won Wednesday, as investors sought to cash in recent gains.

"The global battery market is expected to grow sharply as nations around the globe are ratcheting up efforts to introduce more eco-friendly cars at earlier than scheduled dates," said an industry source.

China, the world's largest auto market, is considering joining France and Britain in banning gasoline and diesel-powered cars, with other nations expected to phase out the manufacturing and sale of fossil fuel-powered cars.

"China's aggressive stance could prod European nations and the U.S. to step up efforts to nurture their EV industry," said Han Byong-hwa, an analyst at Eugene Investment & Securities.

In order to meet growing demand, automakers are moving to jack up their capacity as well.

Last week, the three battery makers said they would invest 2.6 trillion won by 2020 to upgrade EV battery technology and expand local production facilities. The figure consists of 610 billion won to upgrade batteries for EVs and energy storage systems, and another 2 trillion won for production facilities.

LG Chem opened a new battery factory in Poland in late 2016 to add to its overseas production lines that include facilities in the United States and China, while Samsung SDI completed the construction of its EV battery plant in Hungary in May.

SK Innovation said earlier it plans to build production lines in Europe to supply batteries to the German automaker Daimler, which owns the Mercedes-Benz brand. (Yonhap)