SK Innovation plans second EV factory in US and expansion in Hungary

EV battery suppliers

SK Innovation plans to set up a second electric vehicle battery (EV) factory in the United States and is considering an expansion of an electric vehicle battery plant in Hungary, Reuters reported.

Kim Jun, CEO of SK Innovation, said he expects more Asian battery makers to produce batteries in the United States instead of importing them from their home countries to avoid tariffs and to meet demand locally from automakers for the key EV component.

SK Innovation is considering expanding its second factory, currently under construction, in Hungary to boost supplies to Volkswagen. The initial production capacity was planned at 10 GWh but could be boosted to 16 GWh.

Kim Jun said SK Innovation was in talks with Volkswagen to turn that factory into a joint venture.

Volkswagen would only say that it is in talks with various partners to discuss further options. Volkswagen said its battery demand is increasing to over 300 GWh a year in Europe and Asia alone.

The expansion would help the company cope with a boost in new orders last year. As of end-2019, accumulated contract orders stood at 500 GWh from 320 GWh the previous year. But the additional investment means the battery division could break-even in 2022, a year later than expected, said Kim Jun.

SK Innovation is already building its first 9.8 GWh factory in Georgia to serve Volkswagen’s U.S. EV manufacturing base in Chattanooga, Tennessee. That factory is still on track to start producing batteries from early 2022.

SK Innovation’s second plant in Georgia could be 10 GWh, but Kim declined to say which automaker it would be supplying.

The company’s first 7.5 GWh factory in Changzhou, China went online in late 2019, and another 20 GWh factory in Yancheng will be finished by the end of the year. SK Innovations is considering investing in Chinese battery maker EVE Energy Co to turn the company into a joint venture, bringing in another 8.5 GWh of production capacity.

Kim Jun expects pure EVs to make up more than 10 percent of total global car sales in 2025, when SK Innovation’s global production capacity would be about 100 GWh.

The chart prepared by Bloomberg shows the position of SK Innovation in the global EV battery market.