SK Innovation plans second EV battery plant in U.S.,
expansion in Hungary
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 [January 10, 2020] By
Jane Lanhee Lee and Heekyong Yang
LAS VEGAS/SEOUL (Reuters) - South Korea's
SK Innovation Co Ltd plans to build a second electric vehicle (EV)
battery plant in the United States and is considering expanding another
factory in Hungary to meet soaring demand for EV cells, its chief
executive told Reuters.
Kim Jun also said he expects more Asian manufacturers to make batteries
in the United States instead of importing them to avoid tariffs and meet
demand from U.S. automakers locally.
The investment comes as automakers race to adapt to increasingly
stringent regulatory requirements globally aimed at reducing carbon
dioxide emissions.
SK Innovation's second plant at its under-construction production site
in the U.S. state of Georgia could have a capacity equivalent to 10 GWh,
Kim said, declining to identify customers.
The firm has already pledged to invest $1.7 billion to build the first,
9.8 GWh factory to serve Volkswagen AG's <VOWG_p.DE> EV base in
neighboring Tennessee, with production on track to begin early in 2022.
The second, 10 GWh plant would require about $1 billion as capacity of 1
GWh needs $100 million, a person with familiar with the matter said. The
final figure will be subject to board approval in the first half of
2020, the person told Reuters.
In Hungary, SK Innovation is considering expanding its second plant -
currently under construction - to 16 GWh from 10 GWh to boost supply to
Volkswagen, Kim said, adding the firm is in talks with the automaker to
turn it into a joint venture.
A spokeswoman said another option under consideration is to build the
additional 6 GWh capacity in a European country other than Hungary.
Volkswagen told Reuters its battery demand has exceeded 300 GWh a year
in Europe and Asia and that it is discussing options with various
partners.
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The logo of SK Innovation is seen in front of its headquarters in
Seoul, South Korea, February 3, 2017. REUTERS/Kim Hong-Ji
DELAYED TURNAROUND
SK Innovation, South Korea's biggest oil refiner, has rapidly expanded into EV
batteries and Kim discussed further plans in Las Vegas on the sidelines of the
CES trade show.
The plans are aimed at helping the firm cope with a surge in battery orders, at
500 GWh by 2019-end from 320 GWh a year earlier. However, Kim said, extra
investment means the battery division could break even a year later than
planned, in 2022.
In China, SK Innovation's first 7.5 GWh factory in Changzhou went online in late
2019, and a 20 GWh plant in Yancheng will be finished by year-end. The firm is
also considering investing in China's EVE Energy Co Ltd, bringing in another 8.5
GWh of capacity, Kim said.
The expansion plans come amid market concerns about a legal feud between SK
Innovation and cross-town rival LG Chem Ltd in the United States, in which a win
for LG Chem could stop SK Innovation importing EV batteries.
SK Innovation said it is considering all means of resolution, including
settlement, and said it will honor all contracts.
"We made a promise to our customers, and we will keep those promises," said Kim.
Kim expects EVs to make up over 10% of global car sales in 2025 and nearly 20%
in 2030, when SK Innovation's capacity would be about 200 GWh.
(Reporting by Jane Lanhee Lee and Heekyong Yang; Additional reporting by Hyunjoo
Jin in Seoul and Edward Taylor in Frankfurt; Editing by Joseph White and
Christopher Cushing)
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