While others struggle, battery maker SK On is starting to thrive
SK On was the only Korean battery maker to see an increase in its market share in the first half. SK On held 6.5 percent of the world’s battery market as of the end of June, up from 5.3 percent last year, according to data from SNE Research.
LG Energy Solution’s market share fell to 14.4 percent from 23.8 percent, and Samsung SDI from 5.8 percent to 4.9 percent during the same period. SK On is the latest company to enter the battery business.
Increased sales of popular electric vehicles (EVs) contributed to the company's success with automakers signing more orders with SK On for batteries. Ford said it has decided to increase its annual capacity of F-150 Lightning all-electric pick-up trucks from 80,000 to 150,000 starting next year. SK On is currently the exclusive battery supplier for the F-150 Lightning models.
The F-150 Lightning pick-up truck has been selected as one of the cars that will receive the U.S. government's $7,500 subsidy, which could further boost sales.
SK On is also the biggest supplier for Hyundai Motor’s best-selling Ioniq 5 EV. Around 52,000 Ioniq 5s were sold this year through June.
The battery maker is confident about making a turnaround in the fourth quarter for the first time in its history. SK Innovation split off its battery business in Oct. 2021 and established SK On.
SK On reported 2.55 trillion won ($1.9 billion) in revenue between the January-to-June period, with 600 billion won of operating loss. SK On is the only battery maker that does not see any profit in Korea, though the figure for net profit was not provided.
“SK On has been seeing sales jump more than twofold every year since 2017,” said Jin Seon-mi, executive vice president at SK On during a conference call earlier in the month. “We are likely to make a turnaround in the fourth quarter.”
Jin’s confidence comes as the company has aggressively been expanding its production capacity overseas, especially in North America, where many automakers manufacture their vehicles.
SK On already operates six factories overseas, one in the United States, three in China and two in Hungary. It is currently building its second U.S. plant in Georgia which will start production in 2023. Its third plant in Hungary and fourth Chinese plant are expected to start operation in 2024.
The company is also in the process of jointly constructing three more U.S. plants with Ford — one in Tennessee and two in Kentucky. The two companies jointly invested 10.2 trillion won in the factories, which will begin mass production in 2025.
Once completed, SK On is expected to have a total of 14 plants globally by 2025, including one in Korea, which will boost the company’s annual capacity from 76.3 gigawatt-hours (GWh) to 280 GWh.
“SK On is expected to see improvement in profitability in the second half, which is close to making a turnaround,” said analyst Rho Woo-ho from Meritz Securities. “The higher operation rate of its U.S. plant and new Hungary plant will lead to increased shipments of batteries before and after September.”
BY SARAH CHEA [firstname.lastname@example.org]