S. Korea's SK Innovation to form electric vehicle battery unit with Volkswagen

19, Jun. 2019

SEOUL, NNA – South Korean chemical maker SK Innovation Co. will form an electric vehicle battery-manufacturing joint venture with Volkswagen AG.

The two firms have agreed on a fundamental framework for the partnership, calling for annual battery output capacity to supply 530,000 vehicles, equivalent to 16 million kilowatt hours, a source familiar with the matter told NNA on Monday.

The companies are currently in talks on detailed plans such as the structure of the joint venture, plant location and scheduled completion. The planned factory will ship all output to the German carmaker, the source said.

The new battery factory is likely to be located either in China, where Volkswagen boasts the largest share of the automobile market, or in Hungary, where the South Korean firm plans to open two battery factories, according to South Korean media reports.

The German carmaker said in March it would step up electrifying its vehicles by investing over 30 billion euros ($33.7 billion) by 2023, launching nearly 70 new electric models in the next 10 years, instead of the 50 models previously planned.

Last November, the German firm sealed a battery cell procurement deal with SK Innovation, which is also building a battery plant in the United States besides those in Hungary and China.

SK Innovation ranked ninth in battery shipments in the January-April period this year with 643,200 kilowatt hours, according to SNE Research Co., a South Korean market research firm. That lags far behind China’s Contemporary Amperex Technology Co., the world’s largest automotive battery maker known as CATL, at 8.1 million kilowatt hours, and Japan’s Panasonic Corp. at 6.9 million kilowatt hours.

The South Korean firm posted a 282 percent year-on-year increase in shipments over the four-month period, the largest gain among the 10 top global battery suppliers, SNE Research data showed.