SEOUL: SK Innovation Co Ltd is in talks to set up separate battery-making joint ventures with Volkswagen AG and Chinese partners, as the South Korean petrochemicals producer aggressively expands its involvement in electric vehicles (EVs).
The company confirmed talks with Germany’s Volkswagen for the first time, telling Reuters the pair were discussing building a factory together. It also said it was on the cusp of agreeing to build a plant in China with undisclosed partners.
The talks come as EV battery makers boost capacity to cope with fast-growing demand, as automakers race to develop vehicles powered by means other than petrol to meet increasingly stringent emissions regulations worldwide.
SK Innovation, South Korea’s biggest oil refiner, is a latecomer to a market led by compatriots LG Chem Ltd and Samsung SDI Co Ltd plus Japan’s Panasonic Corp. Since starting mass production in 2012, customers have included Germany’s Daimler AG as well as Volkswagen.
“Compared with rivals, we’ve been matching or exceeding investment in the area since last year,” YS Yoon, president of SK Innovation’s battery business, said in an interview. “We tried to find the right moment for massive investment.”
The broader SK Group, South Korea’s third-biggest conglomerate, has increased focus on EV batteries as demand slows at memory chip-making unit SK Hynix Inc.
By 2022, SK Innovation plans to spend 4.51 trillion won ($3.95 billion) to boost EV battery capacity. Last month, it broke ground on a $1.7 billion plant in the United States to primarily supply lithium-ion battery cells to Volkswagen. It is also building two factories in Hungary.
“Our strategy is to keep up with technological advancement by having relationships with some of our key customers,” Yoon said, adding that “nothing has been decided” regarding a JV with Volkswagen.
The JV would be the first in which Volkswagen, one of the world’s biggest automakers, will be co-investing in battery production, similar to the joint battery investment of Panasonic and U.S. EV maker Tesla Inc, analysts said.