At Biden's Urging... South Korean Battery Industry Accelerates Additional US Investment

SK Chairman Chey Tae-won Visits Local Factory During US Trip Accompanying Summit
LG and Samsung Also Accelerate US Investments... Rapid Growth in the Three Major Electric Vehicle Markets

SK Battery America is building an electric vehicle battery factory in Georgia, USA. The second plant (left in the photo) is currently under construction, aiming for mass production the year after next, while the first plant was completed earlier this year. Photo by SK Innovation

[Asia Economy Reporter Choi Dae-yeol] Around the upcoming Korea-US summit on the 21st, it is expected that Korean companies will announce their investment plans in the United States one after another. The sectors directly overseen by US President Joe Biden since his inauguration, such as semiconductors, batteries, and electric vehicles, are the main targets. In particular, Korean battery companies competing with Japanese and Chinese firms in the global market have recently prepared large-scale investments with the US market in mind. As the transition of automakers to electric vehicles has accelerated, battery companies supplying these automakers also anticipate faster EV adoption than initially expected and have proactively prepared accordingly. This is why additional investment timings are expected to be advanced or concretized around this summit.

According to the industry on the 16th, SK Group Chairman Chey Tae-won will visit SK Innovation's US battery plant in Georgia during his visit to the US. This is the first time Chairman Chey personally visits the plant since the US factory plan was finalized around the end of 2018. When construction began in 2019, it was Chairman Chey's younger brother, Vice Chairman Chey Jae-won, and SK Innovation CEO Kim Jun who visited. The first plant was completed earlier this year, and construction of the second plant is underway aiming for mass production the year after next.

Additionally, the company is internally weighing the specific investment scale and timing for the third and fourth plants. When deciding the current plant site, the fourth plant was also considered. The investment for the first and second plants was about 3.016 trillion KRW, so if the third and fourth plants are built on a similar scale, it would confirm an investment plan of around 3 trillion KRW.

Groundbreaking ceremony for SK Battery America held in March 2019. The electric vehicle battery factory is located in Commerce, Georgia, USA, and SK's investment scale is the largest ever among foreign investments in Georgia. Photo by Georgia State Government Website

The company's battery production capacity last year was about 40GWh, and it has declared plans to increase it to over 125GWh by 2025. This means more than tripling capacity in five years. Overseas plants hold the key to this expansion. SK operates EV battery plants not only in Korea but also in China and Europe (Hungary), which are among the world's top three automobile markets, as well as in the US (Georgia). The investments made so far have started to show visible results since last year.

Yoon Hyung-jo, Head of Battery Planning at SK Innovation, recently said in a conference call, "The battery market is growing rapidly, and we are reviewing additional expansions," adding, "Our global expansion strategy is not focused on a specific region but considers balanced growth plans in the US, Europe, and China, and we are exploring various options including joint ventures (JV) and 100% ownership."

LG Energy Solution, a global leader, confirmed an investment plan exceeding 5 trillion KRW last month before the settlement of the trade secret infringement lawsuit with SK. The Michigan plant, which has been operating since 2012, currently has an annual capacity of 5GWh, but the plan is to increase it nearly 30 times to 145GWh (including production from the GM joint venture). This corresponds to the battery capacity for 2 million electric vehicles. Considering that the total EV sales in the US last year were just over 300,000 units, this is a substantial volume.

A battery factory being built in Ohio, USA by Ultium Cells, a production joint venture between LG Energy Solution and General Motors (GM). Photo by LG Energy Solution

LG Energy Solution plans to decide on 2 to 3 additional factory sites within the first half of this year. Although specific locations or scales have not been disclosed, it is expected that decisions will consider proximity to existing plants or automakers. Currently, LG's only US production base is the Michigan plant, while joint venture plants with GM are being built in Ohio and Tennessee. Hyundai Motor and Kia, ranked around 4th globally among EV makers, have revealed local production plans, and LG is evaluated to have competitiveness compared to other automakers, making the southeastern region a likely site for new plants. Since LG is also considering the US energy storage system (ESS) market, central or southern regions may also be options.

Meanwhile, Samsung SDI, which has mainly traded with European automakers, is also expected to finalize its US facility investment plan within this year. Samsung SDI exports battery cells from Korea and other countries to the US, where they are assembled into finished products (battery packs) and supplied to local automakers. Since the Biden administration requires battery cells?the most basic unit?to be produced locally to be recognized as 'Made in America,' the industry views it as only a matter of time before Samsung SDI either upgrades its existing US plant or builds a new one. Samsung SDI's US plant is located in Auburn Hills, Michigan, where many automaker plants are concentrated in the US Northeast. The company acquired this plant from another firm in the past, and there is almost no adjacent land available nearby.

This content was produced with the assistance of AI translation services.