SK Quadruples Battery-Cell Capacity on Electric-Car Shift

(Bloomberg) -- SK Innovation Co. quadrupled battery-cell capacity to 20 gigawatt hours last year and plans to further boost operations worldwide as major customers from Volkswagen AG to Daimler AG churn out more electric cars.

Safeguarding production quality and battery safety takes top priority during the expansion, which should triple SK’s global capacity to 60 GWh in 2022, Chief Executive Officer Jun Kim said in an interview at the Consumer Electronics Show in Las Vegas.

“There has not been a single fire incident” involving an electric car using SK batteries, said Kim, whose company secured a major contract for VW in the U.S. and is in talks to extend supplies to the world’s largest automaker in Europe. “We work extremely hard to ensure quality and have very strict controls,” he said.

SK’s expansion challenges China’s Contemporary Amperex Technology Co. as well as South Korean peers LG Chem Ltd. and Samsung SDI Co., which are all trying to benefit from the accelerating shift to battery-powered cars. Aggressive ramp up plans have triggered production problems at some companies and reports about electric cars catching fire have stoked both regulatory and public scrutiny.

SK’s U.S. facilities in Georgia might double planned capacity to about 21 GWh in coming years and its 7.5-GWh site in Changzhou will be flanked by another 20 GWh factory in China. Additionally, it is considering investing in EVE Energy Co. as part of a strategic alliance, which could add another 8.5 GWh capacity in the world’s largest car market, according to Kim.

Operations in Hungary to cater to European markets could expand beyond 20 GWh in coming years as well to accommodate rising demand, the CEO said. Bloomberg News reported in May that VW’s supply deal with Samsung SDI in Europe was at risk and volumes might fall well short of initial plans.

SK’s accumulated contracted order volume has jumped to 500 GWh from 320 GWh a year earlier, Kim said.

Kim previously told Bloomberg News that SK’s $10 billion expansion plan through 2025 could boost annual capacity to about 100 GWh. Reaching this goal would “not be any problem” and SK is pushing ahead with the development of new battery technologies, he said at CES.

The company is among the earliest developers of energy-dense NCM 811 lithium-ion batteries, along with CATL. It is working on a potential successor technology, called NCM 90, which requires less cobalt, and plans to start commercializing it toward the end of next year, according to Kim.

“SK is very strong technologically,” Roland Berger & Partners consultant Wolfgang Bernhart said by phone. “It’s one of the leaders when it comes to introducing new battery technology and has won a number of contracts,” he said.

SK Innovation is the energy and chemicals unit of South Korea’s third-largest conglomerate SK Group.

To contact the reporter on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Will Davies, Sam Nagarajan

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