Tight Supply, Intensified Sales... Leadership of Choi Jaewon Put to the Test

Choi Jae-won, CEO of SK On, to Lead Growth Strategy and Global Network
OEM Battery Supply and Sales Competition Among Key Issues
Focus on Battery Upstream and Downstream Industries and Expansion Challenges

At the groundbreaking ceremony for the SK Battery America Georgia plant held in March 2019, Choi Jae-won, Senior Vice Chairman of SK (second from the right), Brian Kemp, Governor of Georgia (center), and Kim Jun, then President of SK Innovation (first from the left), are shoveling dirt.

[Asia Economy Reporter Choi Dae-yeol] Choi Jae-won, Senior Vice Chairman of SK Group, has officially confirmed his return to management as CEO of SK On, the battery business affiliate. SK On held its board meeting regarding year-end personnel matters about two weeks later than other SK Group affiliates, and there had been rumors inside and outside the company that the delay was due to Senior Vice Chairman Choi focusing on key personnel appointments and organizational restructuring. Officially, the company stated that the delay was due to prolonged business discussions with overseas partners.

Although it is his first return in over eight years, Senior Vice Chairman Choi has been carefully overseeing the battery business directly and indirectly behind the scenes for the past several years, so he is more aware than anyone of the current issues and fierce competition surrounding the battery market. SK has been interested in the secondary battery business since the 1980s during its days as Yukong, but it was only in the 2000s that it seriously began developing the business with commercialization in mind.

About ten years ago, when Senior Vice Chairman Choi was in detention on embezzlement charges, he famously sent a handwritten letter to an employee working in the battery business. He urged them not to be shaken and to focus on development, fearing that morale would drop due to his personal circumstances. Despite the dominance of Japanese companies, the pioneers of secondary batteries, and LG and Samsung expanding their product lines from small to medium and large batteries backed by internal affiliate supply, Senior Vice Chairman Choi was already aiming to become the world’s number one electric vehicle battery manufacturer at that time.

Choi Jae-won, Senior Vice Chairman of SK, visiting the exhibition booth at CES2019 held in 2019 / Las Vegas, USA - Photo by Kim Hye-won, Asia Economy

Managing Battery Supply for Domestic and Overseas OEMs
Urgent Normalization of Mass Production Plant Operations by the Year After Next

As CEO of SK On, Senior Vice Chairman Choi’s role is growth strategy and global networking. He is tasked with responding to the comprehensive expansion of upstream and downstream industries such as battery raw material supply and used battery recycling, while increasing the number of customers including overseas automakers. The recent situation is challenging. The international lawsuit with LG, which lasted two years, was settled earlier this year, but SK must supply the rapidly increasing order volume on time and withstand quantitative and qualitative competition with Chinese companies that have made significant advances in the past one to two years.

The global shortage of automotive semiconductors due to COVID-19 has somewhat overshadowed battery supply issues, but with the rapid increase in electric vehicle adoption recently, battery supply is likely to come to the forefront. SK supplies batteries for most major electric vehicle models of Hyundai and Kia produced domestically. According to industry sources, SK’s domestic battery production base, the Seosan plant, has an annual production capacity of about 4.7 GWh. This is enough to supply approximately 70,000 medium-sized electric vehicles using about 70 kWh batteries.

Since the domestic production volume of major electric vehicle models using SK batteries such as Ioniq 5 and Porter EV (both Hyundai), EV6, Soul, and Bongo (all Kia) is expected to exceed 100,000 units, supply from the domestic plant alone is insufficient. It is reported that SK has been importing some finished battery products from overseas plants for supply since the second half of the year.

At the photo exhibition commemorating the 20th anniversary of the late Choi Jong-hyun, former chairman of SK, held in August 2018, Choi Jae-won, Senior Vice Chairman of SK (third from the left), Choi Tae-won, Chairman of SK, Choi Shin-won, former Chairman of SK Networks, and Choi Chang-won, Vice Chairman of SK Discovery, are posing for a commemorative photo.

Battery for Ford's pickup truck F-150 Lightning

Bringing the Georgia plant in the United States back on track as soon as possible is also a formidable task. The Georgia Plant 1, which completed internal and external construction and began trial operations in the first half of this year, is reportedly in the final stages aiming for mass production early next year. Plant 2, which resumed construction in mid-year, aims for mass production the year after next. Plant 1 produces batteries for Volkswagen, which will manufacture electric vehicles at the nearby Chattanooga plant, while Plant 2 produces batteries for Ford, with which SK has a joint venture.

In particular, Ford recently doubled its annual production target for the electric pickup truck F-150, scheduled for release next year, to 160,000 units due to high demand, with over 200,000 pre-orders. The battery capacity for this model ranges from 98 to 131 kWh, nearly twice that of a typical medium-sized car. Ford reportedly had concerns about battery supply, but SK’s assurances appear to have led to the increased production target. SK is also recognized as a key player throughout the entire upstream and downstream process, actively voicing opinions during the import of key battery materials such as graphite into the U.S.

Competition to secure new customers is expected to intensify further. Battery demand is rapidly increasing not only for electric vehicles but also in power generation linked with energy storage systems (ESS), a field where SK has yet to fully establish its product portfolio. SK has officially announced its entry into new markets including ESS, urban air mobility (UAM), and robotics. With LG and Samsung also appointing new CEOs and clearly aiming for aggressive expansion, sales competition is expected to heat up. SK is also negotiating a joint venture with Ford in Europe following the U.S., and must soon present a roadmap for European market entry.

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