A view of SK Innovation’s electric vehicle battery plant in Komarom, Hungary. Provided by SK Innovation
SK Innovation will build an additional electric vehicle battery plant in Hungary. It is a large-scale project with an investment of 1.2 trillion won and is capable of supplying batteries to 500,000 electric vehicles.
SK Innovation announced on the 29th that the board of directors had decided to invest about 1.267 trillion won in local subsidiaries to build a third plant in Hungary. It is reported that the Hungarian government will also invest more than 600 billion won in the construction of the third plant. The industry predicts that the production scale of the third plant will be at least 25GWh. SK Innovation, considered a latecomer in the global electric vehicle battery market, is threatening leading companies with aggressive investments. This year, the production scale of the Yancheng plant in China has been increased to 20GWh, which is twice the current value, and the second plant (11.7GWh) is being built in Georgia, with the aim of production in 2023.
Through the conference call (investment briefing) that day, SK presented a target for electric vehicle battery production capacity of 85GWh in 2023. If the expansion proceeds smoothly, it is expected that it will surpass Japan’s Panasonic in three years to form a global top three with LG Energy Solutions and China’s CATL. It is reported that the establishment of a joint venture (JV) with Volkswagen Germany is also under discussion.
Up to 1.6 trillion investment in history… Supply scale of 500,000 electric vehicles
Europe is emerging as a battleground for Korean, Chinese, and Japanese companies over the dominance of the global electric vehicle battery market. While SK Innovation is starting to build the largest plant ever in Hungary, LG Energy Solution and Samsung SDI are planning to expand one after another. Chinese and Japanese companies also announced the establishment of factories.
◆Europe, the largest electric vehicle market
According to the industry on the 29th, all three domestic battery companies, including LG Energy Solution, SK Innovation, and Samsung SDI, plan to significantly expand the production capacity of their European plants this year. SK first came up with a blueprint. On the same day, SK announced that it will establish a new battery factory capable of supplying about 500,000 electric vehicles to the city of Ivan Motors in Hungary.
LG Energy Solutions is also planning to expand the production capacity of the Kobierzice plant in Poland from 70GWh (gigawatt-hour) to 100GWh at the end of this year. It is a scale that can supply about 2 million electric vehicles. It is reported that Samsung SDI is also planning to increase the production capacity of the Hungarian Goed plant from 30GWh to 40GWh.
Chinese and Japanese battery companies also started to establish local factories. It is reported that Chinese CATL will build a factory near Erfurt, Germany, and start producing batteries as early as the second half of this year. Panasonic Japan is working with a Norwegian energy company to review local production.
The reason battery makers are increasing their investment in Europe is because the market is exploding. According to EV Volume, a Swedish market research company, sales of electric vehicles in Europe last year were estimated to have reached 1395,000 units, a 137% increase from the previous year. It has emerged as the world’s largest market, surpassing China (1337,000 units), which only increased by 11.8%. An industry insider explained, “European countries are tightening environmental regulations and local automakers such as Volkswagen and BMW are launching new electric vehicle models, and the market is rapidly growing.”
LG Energy Solutions currently dominates the European market, with a local market share of 70%. A fierce order battle is expected to take place as latecomers such as SK Innovation and CATL jump in.
◆Battery market for chicken games
Until now, investment in battery factories has been the main trend of’expansion after pre-orders’. However, as the air flow has changed recently, more and more companies are building from factories. The same is true of SK Innovation’s third plant in Hungary. The strategy is to proactively respond to the explosively growing European market. An official of the company said, “The demand for batteries is increasing rapidly to the extent that finished car makers cannot handle orders.”
Competition in the electric vehicle battery market is flowing in a similar pattern to the memory semiconductor market in the mid-2000s. The battery market is expected to exceed 180 trillion won in 2025, exceeding memory semiconductors (150 trillion won). An official in the battery industry explained, “Considering the speed of recent technological innovation, even if investment is lagging for only half a year, it is a situation that cannot keep up with the leading companies. did. It is a’chicken strategy’ in which the production scale is increased to increase cost competitiveness and a large-scale volume operation is conducted.
Reporter Mansoo Choi [email protected]