As Market Conditions Change
The three Korean battery companies are reconsidering their capacity expansion plans.
SK On, a battery subsidiary of SK Innovation, temporarily halted a plan to build an electric vehicle (EV) battery plant in Ankara, Turkey by jointly investing 3 trillion won with Ford of the United States and Koç Holding of Turkey, according to industry sources on Jan. 9.
“After signing an MOU on a battery joint venture with Ford and Koç Holding, we discussed the establishment of a joint venture in Turkey,” an SK On official explained. “But we have not been able to finalize the plan so far. However, we have not yet decided to suspend our negotiations.”
SK On signed the MOU in March last year. The MOU was about building a battery factory with an annual production capacity of 30 to 45 GWh near Ankara.
The plant was scheduled to produce nickel, cobalt, manganese (NCM) batteries for EVs to be sold in Europe by Ford and others as early as 2025, but the three related companies have not been able to hammer out a final agreement.
SK On says it cannot proceed with the Turkish plant project because market situations have changed fast in a short period of time. A global economic downturn and interest rate hikes have made it difficult to raise funds. SK On is currently in the process of building new battery factories and expanding existing ones simultaneously in the United States, Korea, China, and Hungary.
Last year, SK On tried to raise funds for plant construction through a pre-IPO. But the capital market shrank rapidly, and it raised 800 billion won only. In the end, SK Innovation, the parent company of SK On, injected two trillion won into SK On through a paid-in capital increase.
LG Energy Solution is also reconsidering a plan to build a factory of its own in Arizona, the United States, by investing 1.7 trillion won. The plan was announced last year. The battery maker is adjusting its business speed as it is building three factories in the U.S. in collaboration with General Motors, another plant in Canada in collaboration with Stellantis, and factories in China and Europe, analysts say.
“We have not scratched off the Arizona plant plan, and we are reviewing it,” an LG Energy Solution official said. “We intend to examine our investment plan under the microscope due to changes in market situations.”
Samsung SDI has not yet announced large-scale follow-up investment after announcing a plan to establish a joint plant in Indiana, the United States, with Stellantis in May 2022.