SK On to expand domestic battery cell plant for $1.1 bn

SK On Co., a South Korean rechargeable battery maker, will make its largest-ever domestic facility investment of 1.5 trillion won ($1.1 billion) to quadruple its production capacity in the country by 2028.

The company on Wednesday signed a memorandum of understanding with the Seosan city government and the South Chungcheong provincial government to build its third battery cell factory on a 44,152-square-meter plot of land within the Seosan Auto Valley complex.

It will mark SK On’s first domestic investment since 2018. Its facility expansion had been focused on the US and Europe.

Once completed in 2025, the new plant is expected to secure a production capacity of 14 gigawatt hours (GWh) a year by 2028.

Its two existing plants in the city of Seosan will transform into smart factories to expand production capacity, improve yields and speed up their manufacturing process by more than 30 times.

It is said SK On’s production yields have not reached high enough levels.

With the investment, SK On’s domestic production capacity will quadruple from the current 5 GWh a year to 20 GWh, equivalent to 280,000 electric vehicle battery packs by 2028.

The facility expansion will come as Hyundai plans to mass produce EVs at the Ulsan plant in South Gyeongsang Province from the end of 2025. The Ulsan plant is expected to churn out 150,000 EVs a year.

SK On is the biggest EV battery supplier for Hyundai and Kia Corp. Its pouch-type battery cells are installed in Hyudnai’s IONIQ 5, the all-electric Genesis GV60 and the Genesis electrified SUV GV70, as well as Kia’s EV9.

Kia’s SUV EV7, scheduled to be released in 2025, will likely be powered by SK On’s battery packs.

SK On plans to begin mass production in 2028 of solid-state batteries, dubbed a game changer, thanks to their longer driving range and shorter charging time than lithium-ion batteries.

Since being spun off from SK Innovation Co. in 2021, SK On has raised a total of 4.8 trillion won in pre-IPO funding.

The fundraising includes the $400 million from Singapore-based Hillhouse and an additional 1.2 trillion won ($900 million) from a consortium of BlackRock, Qatar Investment Authority and MBK Partners this year.

Meanwhile, LG Energy Solution Ltd. plans to boost domestic capacity to 33 GWh versus the current 20 GWh through the facility expansion in Ochang, North Chungcheong Province.

Samsung SDI Co. produces medium-to large-sized battery cells with an annual capacity of 10 GWh in Ulsan, near Hyundai Motor’s manufacturing base in the city. It plans to build new production lines in Cheonan, South Chungcheong Province.

Write to Nan-Sae Bin at binthere@hankyung.com
 

Yeonhee Kim edited this article.