SK Innovation Eyes $10 Billion Battery Bet After Major VW Order
(Bloomberg) -- SK Innovation Co. is weighing a $10 billion plan to invest in battery cells, a move that would transform the supplier to Volkswagen AG and Daimler AG into a global leader as the industry pushes to bring electric vehicles to the masses.
The potential expansion would challenge the likes of Contemporary Amperex Technology Co., LG Chem Ltd., and Samsung SDI Co., which are all vying to capitalize on the shift to battery-powered cars. The spending by the South Korean company would extend through 2025 and boost capacity to about 100 gigawatt hours, Chief Executive Officer Jun Kim said in an interview at CES in Las Vegas.
“We’re confident we can become a global leader,” said Kim, whose company last year won an order to supply Volkswagen electric vehicles in the U.S. and Europe. SK Innovation has the engineering and chemical expertise to advance lithium-ion battery technology and also the financial means to pull off the ambitious plan, he said.
Carmakers have started to roll out broad electric-car lineups, pressured by tough emissions rules that have prompted concerns about battery shortages and availability of raw materials. Volkswagen, the world’s biggest carmaker, last month said it’ll boost the budget on its 30 billion-euro ($35 billion) spending plan on e-cars for a more aggressive push after the European Union tightened regulation.
SK Innovation is the energy and chemicals unit of South Korea’s third-largest conglomerate SK Group. The unit currently has battery-cell capacity of 4.7 GWh a year, which is targeted to rise to 60 GWh by 2022, Kim said. That’s up from a previous goal of 55 GWh by then.
Last month, the company announced a $1.67 billion plant in the U.S. that will potentially supply nearby auto manufacturers such as Volkswagen, Daimler and Hyundai Motor Group. The facility in Georgia may be expanded to as much as 50 GWh capacity by 2025, which would cost some $5 billion. It’s also building two factories in China and one in Hungary.
SK Innovation was among the earliest developers of energy-dense NCM 811 lithium-ion batteries that it expects to deliver to a carmaker in China starting this year.
Lithium-ion batteries will continue to play a critical role for many years, Kim said, with development of alternative technologies such as solid-state batteries facing hurdles on energy density and performance.
The executive said he’s “keeping eyes open” for possible acquisitions, but stressed that valuations for technology companies tend to be high and can be difficult to calculate reliably.
“The battery industry has started a game of chicken,” said Kim, with the sector rapidly reshaping around a few competitive companies. “Our strategy is to create a global success story.”
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