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EV batteries

SK Innovation to build 3rd EV battery plant in Hungary for $2.3 bn

By Jan 29, 2021 (Gmt+09:00)

SK Innovation to build 3rd EV battery plant in Hungary for .3 bn

SK Innovation Co. will build its third electric-vehicle battery plant in Hungary for $2.29 billion, aiming to grab a greater share of the fast-growing European battery market.

The South Korean refinery-cum-battery company said on Jan. 29 that it will invest 1.27 trillion won ($1.15 billion) in its affiliate,  SK Battery Hungary Kft., to build the new production line, or half of the total cost needed for the construction, in Iváncsa.

SK Innovation has secured about 700,000 square-meter land in the city, some 50 km southwest of Budapest. It will break ground for the construction in the third quarter of this year. 

"With this investment, SK Innovation will not only make a big contribution to the development of the global electric vehicle industry's value chain and its eco-system but also take a leap forward and become a leading EV battery maker," SK Innovation Chief Executive Kim Jun said in a statement. 

The company is aiming to expand its global capacity to more than 125 gigawatt-hours (GWh) by 2025. The EV battery demand in the European market, one of the largest globally, is forecast to increase by more than sixfold to 256 GWh in 2025 from the current 41 GWh.

The third plant will have an annual capacity of 30 GWh, enough to charge 430,000 vehicles. The annual capacity will be bigger than the combined 17.3 GWh of its two other plants in the city of Komarom in Hungary.

For the other half of the construction cost, SK Innovation said it will raise funds through project financing until 2028. 

Sources said the Hungarian government is also likely to chip in more than 600 billion won in the construction of the plant. SK Innovation said it plans to start operating the factory in the first quarter of 2024.

The South Korean company finalized the investment plan during an online conference call on Friday with Hungarian government officials, including Hungarian Foreign Minister Szijjártó Péter and Iváncsa mayor Molnár Tibor.

SK Innovation is running a plant with a capacity of 7.5 GWh in the northwestern Hungarian city of Komarom. A second plant with a capacity of 9.8 GWh is currently under construction with an aim to put it into operation in the first half of 2022.

Komarom is home to assembly lines of German carmaker Audi AG and close to a plant of another German automaker, Daimler AG, which owns Mercedes-Benz.

Its expansion in Europe comes as global automakers are shifting to eco-friendly cars to comply with environmental regulations, leading to increasing demand for EV batteries.

Europe is emerging as a greater EV market than China, currently the world’s single largest, on the back of tighter regulations and hefty subsidies. More than half of the world’s EVs are forecast to be sold in Europe by 2025.

Graphics by Jerry Lee
Graphics by Jerry Lee

EYES WORLD’S TOP 3 SPOT

SK Innovation, which supplies batteries to carmakers such as Hyundai Motor Co., Volkswagen and Ford Motor, has been aggressively expanding facilities worldwide, with an aim to emerge as one of the top three players.

According to market research firm SNE Research, SK Innovation came in fifth with a share of 5.5% in the global EV battery sales market in the January-to-November period of 2020.

In November, SK opened its second EV battery plant in China. The 1.7 trillion won plant will add 10 GWh in annual production capacity that can run 200,000 electric vehicles.

The company also said in December it is entering into a joint venture with Chinese battery maker EVE Energy Co. to set up a third battery plant in China.

SK Innovation, which has battery production sites in the US, Hungary, China and South Korea, plans to raise its total output capacity from the current 40 GWh to 85 GWh by 2023, surpassing the 73 GWh capacity of Panasonic Corp., the world’s third-largest EV battery maker.

As part of its plan to expand globally, SK Innovation may also establish a battery joint venture with German automaker Volkswagen in the US, according to industry sources.

Korean EV battery makers have been leading players in Europe but face growing competition from their global peers.

China’s CATL, the global market leader, has begun running its battery factory in Germany, while Japan’s Panasonic is pushing to build a plant in Norway.

LG Energy Solution, a battery unit of Korea’s LG Chem Ltd., is also looking to expand its capacity at its plant in Poland. The Poland factory will have an output capacity of 100 GWh by the end of this year from the current 70 GWh. The company is said to be the leader in the European EV battery market with its share at some 70%.

Samsung SDI Co. is also planning to expand the output capacity of its plant in Hungary to 40 GWh from the current 30 GWh.

Write to Man-Su Choe at bebop@hankyung.com

In-Soo Nam edited this article.

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