SK Innovation Co., one of South Korea's three major lithium-ion battery producers, will build an electric vehicle (EV) battery production base in the United States.
The company said its board approved on Nov. 26 a plan to spend 1.14 trillion won (US$1.01 billion) to build an EV battery plant in the city of Commerce in Jackson County, Georgia. The plant will have an annual capacity of 9.8 gigawatt-hours (GWh) of batteries. With a total area of 1.12 million square meters, it will begin construction in early 2019 and aims to start mass production in 2022.
SK Innovation has decided to set up the plant in the U.S. as it has been recently selected as a battery supplier by Germany-based automotive firm Volkswagen for its U.S. and European EV models. Currently, Volkswagen operates a plant in Chattanooga, Tennessee. It manufactures its midsize sedan Passat and large sport utility vehicle (SUV) Atlas here. However, industry analysts expect that Volkswagen will gradually turn the U.S. plant into an EV production base as it has already declared to become an EV producer. This is why SK Innovation, which is already building the outpost for the European market in Hungary, needs to have an EV battery production facility in the U.S.
Under the recently revised North American Free Trade Agreement (NAFTA), operating a production facility in North America has become an essential requirement. According to the new NAFTA rules, cars and trucks must have 75 percent of their components manufactured in the North American region and should have at least 40 percent of the work on the vehicle done by workers earning US$16 an hour in order to qualify for zero tariffs. In other words, automakers can no longer use batteries manufactured in South Korea, China and Europe in models to be sold in the U.S.
In particular, SK Innovation is planning to set up a battery production base in the southeastern region of the U.S. to secure orders from not only Volkswagen but also global automakers based in the region, including BMW, Daimler, Volvo and Hyundai and Kia.
With the construction of the new plant in the U.S., SK Innovation aims to have an annual capacity of 55GWh of batteries by 2020, which is more than 10 times higher than the current 4.7GWh.