Korean Battery Makers Stand to Benefit
U.S. carmaker Ford announced in Germany on March 14 (local time) that it will invest US$2 billion in its plant in Cologne to produce 1.2 million electric vehicles annually from 2024. Ford Otosan, a joint venture between Ford and Turkey’s Koc Holding, is also planning to set up a new electric vehicle production base in Romania.
Ford has deepened its partnership with Volkswagen to use the German partner's Modular Electric Drive (MEB) matrix, a platform for electric vehicle production. Volkswagen announced the signing of a new partnership deal with Ford on MEB supply.
As a result, Ford’s European electrification blueprint has been outlined. It will produce battery cells through a joint venture to be established with Korea's SK On and Turkey's Koc Holding, assemble them into battery packs at the Cologne and Romanian plants, and load them into new MEB-based electric vehicles. The three-party JV will be established near Ankara, Turkey, and produce up to 640,000 batteries annually.
The expansion of Volkswagen Group’s platform business is expected to bring additional benefits to the three Korean battery producers that supply batteries to it. The German automaker also receives batteries from China's CATL and has signed a supply contract with Sweden’s Northbolt.
In 2021, Volkswagen expanded its contacts with Chinese companies, including BYD, under a strategy centered on prismatic batteries. Then, market watchers expressed concern that the volume of transactions between Volkswagen and LG Energy Solution and SK On might decrease as the two Korean companies do not make prismatic batteries. However, the relationship between Volkswagen and Korean battery makers seems to be rapidly progressing. LG Energy Solution and SK On recently announced their plans to develop prismatic-type batteries. Market watchers say that behind the two companies' move was a request from Volkswagen, which was disappointed by the performance of Northbolt and Chinese companies, excluding CATL.
As batteries from LG Energy Solution, Samsung SDI and SK On are widely recognized as suitable for the MEB, Volkswagen’s platform business expansion will benefit the three Korean battery makers.