SK On to build $2.3 bn EV battery plant for Hyundai in US

SK On Co., the world’s fifth-largest electric vehicle battery manufacturer, plans to build a new US factory to supply batteries to a planned EV plant of Hyundai Motor Co. there to expand market share in the world's No. 3 EV market.

SK On is set to construct its third battery plant in the US state of Georgia with an annual capacity of 40 gigawatt hours (GWh), according to industry sources on Thursday. That is enough for 500,000 EVs that can drive more than 500 kilometers with a single charge. The factory, which is scheduled to start operations in 2025, is expected to need about 3 trillion won ($2.3 billion).

The battery maker, wholly owned by South Korea’s energy major SK Innovation Co., is in final talks with Hyundai on a joint investment in the factory, the sources said.

“SK On wants a joint venture plant with Hyundai as it faces difficulty in raising funds, but Hyundai hopes to take just a minor stake to reserve funds for investments in other businesses,” said a source with knowledge of the discussions. SK On is forecast to log a loss of more than 1 trillion won this year, although it is trying to secure 3 trillion won by selling new shares to a major investor.

“SK On agreed to supply batteries to EVs produced by Hyundai in the US even if the battery maker builds the factory alone.”

BATTERIES FOR IONIQ 7, EV9 MADE IN USA

SK On’s batteries will be installed on Hyundai Motor Group’s fully electric sport utility vehicles – Hyundai’s IONIQ 7 and Kia’s EV9. The prospective EV-dedicated plant in Georgia plans to manufacture not only its own vehicles but also models of its affiliate Kia Corp. based on the group’s proprietary Electric-Global Modular Platform (E-GMP).

Hyundai has been in advanced discussions with Georgia officials to build an EV factory in the US state, Reuters reported on May 9, citing three unnamed sources with knowledge of the talks.

The battery supply deal with SK On helped Hyundai complete an EV value chain in the world’s third-largest EV market. SK On secured another major automaker as a partner in addition to Ford Motor Co.

Hyundai and SK On have been reportedly preparing for announcements of their US investments later this month to coincide with US President Joe Biden's planned visit to Seoul on May 20.

Hyundai Motor Group ranked No. 2 in the US EV market in the first quarter with Hyundai and Kia selling 15,414 units of the eco-friendly models. Tesla sold 113,882 EVs, keeping the throne during the January-March period.

Competition in the US EV market is expected to intensify as automotive chip supply was predicted to improve from the current quarter, analysts said.

Write to Hyung-Kyu Kim, Il-Gue Kim and Han-Shin Park at khk@hankyung.com
Jongwoo Cheon edited this article.