"3-4 Years Are the Golden Time" K-Battery Bets on Focused Investment and Organizational Restructuring

SK Battery Launching Next Month
Growing Importance in Industrial Security
EU and US Focus on National-Level Development and Support
SK's Current Production Capacity at 30GWh
Aiming for 500GWh+α by 2030
Targeting 20% Market Share to Become World No.1
Experts Say "3-4 Years Golden Time to Lead Market"

[Asia Economy Reporter Choi Dae-yeol] SK Innovation's decision on the 16th to spin off its battery business into a separate company is aimed at responding more agilely in the fiercely competitive global battery industry. As batteries are expected to be increasingly used not only in the transportation sector but also across energy demand sectors such as industry and households in the near future, this move is interpreted as a strategic step to proactively establish a solid business foundation.

Amid the prominent alliances and mergers between automakers and battery companies worldwide, advanced countries like Europe and the United States, which had been relatively lagging behind, are now rolling out measures to foster their domestic battery ecosystems. SK, Korea's first oil refining company with energy business as its core, plans to leverage its existing business know-how and comprehensively nurture its battery materials business to leap forward as a global leading battery company.

Last July, British Prime Minister Boris Johnson visited the Battery Industrialization Center in Coventry, UK.

The Background Behind Countries' Vigorous Battery Development

Industries handling transportation means including automobiles and energy sources have developed mainly in advanced countries since the Industrial Revolution in the 19th century. This explains the keen interest in next-generation power sources like batteries. Currently, medium and large-sized vehicle batteries are predominantly supplied by Korea, China, and Japan. Given the US-China trade disputes and the possibility of strengthened protectionism worldwide, major countries fostering battery ecosystems aim not only to secure future growth engines but also to address industrial security concerns.

Europe has officially launched a battery alliance project this year, supported by a budget of 4 trillion won from major countries centered on automakers and material companies. US President Joe Biden also ordered a review of the battery supply chain immediately after taking office. This is because reliance on foreign battery supply could expose industrial foundations and society at large to risks. The Korean government has clearly designated batteries as a next-generation growth industry and is committed to actively nurturing it. Anticipating fierce competition in battery technology, it plans to strengthen R&D capabilities by supporting workforce development and comprehensively foster the ecosystem including materials, partner companies, and new markets such as used batteries.

Kim Jun, CEO of SK Innovation, is speaking in his capacity as chairman at the SK Innovation extraordinary general meeting of shareholders held on the 16th at the SK Seorin Building in Jongno-gu, Seoul. On the same day, SK Innovation held the extraordinary general meeting of shareholders and approved the physical division plan for the battery and petroleum exploration and production (E&P) businesses. Photo by Kim Hyun-min kimhyun81@

Aggressive Investment by SK: "World No.1 by 2030" Goal

SK entered battery development early but began expanding its business in earnest only after the 2000s. Unlike LG Energy Solution or Samsung SDI, which started with small batteries based on internal group demand and gradually expanded to medium and large batteries, SK is pursuing aggressive investments to catch up due to its relatively late start.

SK began significantly expanding large-scale production facilities in Europe, China, and the US?three major electric vehicle markets?starting in 2018. The soon-to-be-launched SK Battery (tentative name) next month is expected to continue this trend. SK has formalized additional European expansion with Ford through a joint venture in the US and decided to invest in building a fourth plant in China, where it already has production facilities centered on joint ventures. SK aims to increase its global production capacity from the current 30GWh to 200GWh+α by 2025 and 500GWh+α by 2030, targeting a market share exceeding 20% to become the world's number one.

A view of the battery factory being built in Ohio, USA by Ultium Cells, a joint venture between LG Energy Solution and GM

Panorama of SK Innovation Battery Plants 1 and 2 in Georgia, USA [Image source=Yonhap News]

Competition among global leading battery companies is expected to intensify further. Domestic battery companies have experienced slow external growth over the past 1-2 years due to internal issues such as ITC lawsuits, so they are preparing to aggressively expand in anticipation of market growth. Chinese companies like CATL and BYD have rapidly grown based on domestic demand, and Japanese companies, which had been passive, are now advancing with technological competitiveness.

The industry expects the next 4-5 years to be a "golden hour" for securing market leadership amid mismatches between battery supply and demand. Although battery supply is currently stable, if the expansion of electric vehicles continues at the current pace, supply shortages are likely to occur as early as the year after next. Battery manufacturers with a certain level of technology are expected to gain a negotiating advantage. LG and SK's battery plants in the US are expected to begin mass production by the end of this year or next year, while Samsung SDI is also reportedly set to finalize plans for a battery cell plant in the US in the near future.

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