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| SK On's battery plant in Georgia / Courtesy of SK On |
By Kim Bo-eun
SK's battery affiliate is currently developing lithium iron phosphate (LFP) batteries for electric vehicles (EV), and the company said its battery business will turn profitable next year.
Its confirmation for the development of LFP batteries came as global carmakers such as Tesla and Mercedes-Benz are planning to use cheaper but less-powerful batteries for EV models in the lower price segment. The LFP battery market is currently being led by Chinese battery makers such as CATL.
SK On is the name of the new battery affiliate that separated from SK Innovation (SKI) earlier this month.
"We are developing diverse chemistries other than nickel, cobalt and manganese (NCM), according to technological trends and client requests," SK On's head of planning Yoon Hyung-jo told investors during a conference after the release of its parent company SKI's third-quarter earnings results. "We are developing high-performance LFP batteries which have high energy density and fast charging speed, based on our technological capabilities that had led the market for high energy-density NCM batteries."
The cheap, stable LFP batteries are getting more attention because of the continued price increases for base materials such as cobalt, as well as the continuing development of EV-charging infrastructure. Despite its cost-oriented advantages, however, the LFP battery's lower energy density and resulting shorter travel distance are considered key shortcomings.
Plus, the executive said the company already won 220 trillion won worth of EV battery orders and was expecting its battery business to turn a profit next year. Next year, SK plans to start mass-producing EV batteries at its U.S. battery factory, and for its second EV battery line in Hungary to be fully operational.
"The current order volume SK has received so far was some 1.6 terawatt-hours (TWh) because of the base effects from the recent establishment of SK's battery joint venture with Ford. In terms of monetary worth, this is about 220 trillion won."
Yoon added the company is in discussions with other global carmakers beyond its clients, such as Hyundai-Kia Automotive Group and Ford, to win more EV battery orders.
SK's sales for the third quarter came to 12.3 trillion won, and its operating profit hit 618.5 billion won, on higher crude prices and strong battery sales, which came to 816.8 billion won, the highest quarterly sales figure yet. SK's battery sales for the first three quarters of the year totaled 1.97 trillion won ― making it likely sales on an annual basis will exceed 3 trillion won.
SK said battery sales were accelerated by higher utilization rates of factories in Yancheng and Huizhou in China that began mass production in the first half of this year. Sales for the third quarter grew 68 percent year-on-year.
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