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South Korea's SK On plans a new, lower cost EV battery by 2025

Reuters · 01/06/2023 00:34
South Korea's SK On plans a , lower cost EV battery by 2025

By Joseph White

- South Korea's SK On plans to produce a , lithium-iron-phosphate electric vehicle battery by 2025 as part of an effort to deliver lower-cost batteries to automakers squeezed by rising EV costs, a senior executive of the company said on Thursday.

"We're going to produce an LFP product by 2025," Jason Lee, executive vice president and head of SK On's battery marketing division, told Reuters on the sidelines of the CES conference. SK On is a subsidiary of South Korean energy group SK Innovation 096770.KS.

SK On customer Ford Motor Co F.N said last year it plans to offer Chinese-made lithium iron batteries from CATL 300750.SZ in its Ford F-150 Lightning electric truck year. Tesla Inc TSLA.O and EV startup Rivian RIVN.O also have announced plans to use LFP batteries.

Chinese battery makers dominate world LFP production, supported by strong demand from home-market automakers. LFP batteries can be produced at lower cost, but deliver less range than comparable -cobalt EV batteries.

The cost advantage from lithium-iron chemistry depends on where the batteries are made, Lee said. LFP batteries made in China can have a 20% cost advantage over cobalt batteries. LFP batteries produced in Europe can cost 15% less, he said.

SK On plans to source its LFP batteries initially from China, Lee said.

"If you produce in the United States, there is benefit," he said.

SK On is investing in U.S. battery plants and by 2026 expects to have 150 gigawatt-hours of capacity. Lee said those investments, as well as investments in U.S. production of cathodes should allow SK On's U.S. customers to meet domestic content requirements attached to U.S. EV subsidies.

Battery makers and automakers are expanding EV battery capacity globally, and some industry analysts have questioned whether that could result in oversupply. Lee said he does expect oversupply in the future. SK On's factories have been built with guarantees from automakers that they will take the batteries, he said.

Raising the capital required to fund investments in capacity and chemistries is one of SK On's main challenges, Lee said.

"We are thinking about raising more capital," Lee said.

(Reporting by Joe White in Las Vegas and Heekyong Yang in Seoul; Editing by Muralikumar Anantharaman)