“If you don’t change, you can’t live… Break through the crisis with bold investment.”
SK Innovation to build 3 battery plant in Hungary
Total investment of 2.6 trillion won, large project
Japan will grab Panasonic and become the global top 3
Taewon Choi, Chairman of SK Group. Provided by SK.
SK Innovation announced on the 29th that it had an operating loss of 2.568.8 billion won last year. This is the largest loss ever. This is the effect of the global oil refining industry stagnation due to the novel coronavirus infection (Corona 19).
On the same day, SK Innovation announced an extra-large project to build an electric vehicle battery plant in Hungary with an investment of 2.6 trillion won. Unfortunately, the size of the deficit and the size of investment were almost the same.
The battery industry was astonished. This is because it is not the time to make a large-scale investment given the situation surrounding SK. SK recorded the largest deficit last year in its main business, oil refining. The earnings outlook for this year is also uncertain. Unless the Corona 19 is over, demand for jet fuel is difficult to recover.
LG Energy Solutions is suing in the United States for infringing battery trade secrets. The situation is disadvantageous for SK. US International Trade Commission (ITC) Is next month 10Final judgment is made on the day (local time). In the worst case, you may need trillions of people to reach an agreement.
The barn situation is not enough. As of the third quarter of last year, SK Innovation’s cash and cash equivalents amounted to KRW 3.594.7 billion. On the day, SK announced that it would invest about 1.27 trillion won, which is 50% of the total investment, to a Hungarian subsidiary. A total of 2.6 trillion won will be invested sequentially by 2028.
From the standpoint of a company, it means’young-cheol’ in terms of shit. With uncertainty on all sides, SK made a bold investment decision.
A view of SK Innovation’s first plant in Komarom, Hungary. Provided by SK Innovation.
On this day, the conference call (investment briefing) was also held in a determined atmosphere. SK Innovation President Kim Joon said, “We decided to invest for the future of the company even in the midst of the crisis.” Competition in the global electric vehicle battery market is intensifying day by day, and uncertainty factors such as LG Energy solution and the burden before litigation are large, but they will break through the crisis with bold investment.
In the business world, there is also a view that Choi Tae-won, chairman of SK Group, threw the number of matches. A high-ranking business official said, “This investment plan cannot come out without the leadership of the owner who looks at the future and makes bold decisions.”
Chairman Choi also decided to acquire Hynix in 2011 despite fierce opposition from the presidents of affiliates. It is interpreted that it was once again throwing the winnings in order to take the lead in the electric vehicle battery market, which is called the’second semiconductor’.
![The biggest investment decision in history on the day of the biggest deficit in history... Choi Tae-won's number of matches [최만수의 전기차 배터리 인사이드]](https://i0.wp.com/img.hankyung.com/photo/202101/01.25193872.1.jpg?w=560&ssl=1)
SK Innovation is rapidly growing in the electric vehicle battery market with the full support of Chairman Choi. According to market research firm SNE Research, SK ranked fifth in the world with 5.5% market share in the ranking of battery usage for electric vehicles sold worldwide from January to November last year. During the same period of the previous year, it jumped 4 places from 9th place. It recorded the highest growth among global battery makers.
That was considered a latecomer in the electric vehicle battery market SKInnovation is threatening leading companies with aggressive investments. This year, the production scale of the Yancheng plant in China was doubled. 20GWhIn the US state of Georgia, 2023The 2nd factory (11.7GWhBuilding).
The production capacity of SK Europe’s 3 plant, which will be in Hungary’s Ivan Car, is 30GWh, which is larger than the previous one and two plants in Komarom, Hungary. It is the largest single plant ever.
At the conference call, SK announced the target of electric vehicle battery production capacity. 2023year 85GWh, presented above 125GWh in 2025. This is a further increase from the previous target of 100GWh in 2025. If expansion proceeds smoothly, SK Innovation will surpass Japan’s Panasonic in three years. LGEnergy Solutions, China CATLAnd it is expected to form the top three globally.
SK Innovation’s investment has a sense of urgency that it cannot survive without a’deep change’. It is going to be reborn as a world-class rechargeable battery company out of the oil refining industry, which has seen a clear downward trend for several years.
SK Innovation has been taking the strategy of building a factory after receiving an order for batteries first, but it has made a preemptive investment in Hungary this time. An official of the company said, “The demand for batteries is rapidly increasing so that it cannot handle the orders of finished car makers,” and “willing to leap to a global leader with more aggressive orders.”
Reporter Mansoo Choi [email protected]