SK Innovation will supply Volkswagen, a German automaker, with next-generation electric vehicle (EV) batteries.
The deal draws attention as Volkswagen has been aggressively preparing for so-called "third-generation electric cars" that can run more than 500 km on a single charge.
The Volkswagen Group announced on Nov. 13 (local time) that it has selected SK Innovation as a strategic supplier of battery cells for production of electric vehicles based on the modular electric drive (MED) platform.
Volkswagen says the MEB is a dedicated powertrain for third-generation electric cars to be launched in 2021. It is an approach to mass-produce electric vehicles more efficiently by standardizing battery packs, drive motors, wheels, and design among others. For example, if a carmaker sets battery pack space and specifications, it can receive similar performance batteries from many rechargeable battery companies. Regardless of whether a rechargeable battery maker uses a square-shaped battery or a pouch-type one, Volkswagen does not have to worry about batteries if a battery satisfied the automaker in terms of performance and capacities.
Volkswagen is already receiving batteries from four companies -- LG Chem and Samsung SDI of Korea, Panasonic of Japan and CATL of China. But Volkswagen selected an additional company as a battery supplier because it needs battery capacities of more than 150GWh annually to launch 50 new electric models by 2025, according to its Roadmap E strategy. "Volkswagen selected SK Innovation instead of AESC of Japan and BYD of China, both of which beat SK Innovation in terms of market share, as the German carmaker put priority on technological aspects," an automobile industry official said.
The electric car battery industry estimates the size of Volkswagen’s contract with SK Innovation at about 120 GW for two million electric vehicles. Currently, SK Innovation's order backlog is estimated at 300GW, which is equivalent to about 40 trillion won. Thus, its order backlog reached about half of LG Chem’s order balance of about 70 to 80 trillion won.
SK Innovation will produce batteries for electric cars produced at Volkswagen’s North American plant starting in 2022, according to the deal. At the moment, SK innovation is the sole provider of batteries for Volkswagen's production facilities in North America. The Korean battery maker plans to start the construction of an electric car battery cell plant in the U.S. next year. Currently, three or four sites are under economic feasibility study. It is also reported that SK Innovation is planning to construct a battery factory in Europe in cooperation with Volkswagen by promising to supply a portion of batteries for Volkswagen cars to be sold in Europe.
SK Innovation is aiming to have a system to produce electric car batteries of 20GWh in 2022 and 50GWh in 2025. To this end, the company began to expand its Seosan plant in Korea to raise its production capacity to 4.7GWh, and is building battery cell plants in Changzhou (7.5GWh) of China and Komarom (7.5GWh) of Hungary.