South Korea’s SK Innovation, a supplier of electric vehicle (EV) batteries to Daimler and Volkswagen, aims to boost production capacity more than tenfold by 2022, betting on global demand.
The company expects the battery business to break even in 2020, a senior manager said at a news conference on Wednesday at the company’s plant in Seosan, a three-hour drive from Seoul.
The outlook comes days after Mercedes maker Daimler said it would buy battery cells worth more than 20 billion euros ($23 billion) by 2030 as it readies mass production of hybrid and electric vehicles.
Daimler and other European automakers are aggressively expanding in electric vehicles as European regulators clamp down on diesel emissions.
SK Group Chairman Chey Tae-won has put more focus on the conglomerate’s EV battery business as its memory-chipmaking unit SK Hynix faces a slowdown in demand from smartphone makers after a two-year-long boom.
On a wall at the Seosan plant, a handwritten message from Chey reads: “Til the day when all vehicles run with our batteries, and replace gasoline (vehicles), SK’s battery team will be up and running.”
Late to the EV battery market compared with rivals LG Chem and Samsung SDI, SK Innovation has announced investment plans worth about $3 billion since late 2017, to build new factories in China, Hungary and the United States.
China’s pledge to phase out subsidies for electric and plug-in hybrids by 2020, and an increase in the country’s EV sales quota will benefit SK Innovation, said Lee Du-beom of the company’s battery team.
Currently, EVs using South Korean batteries are not eligible for generous subsidies in China.