The rapid push toward a carbon-neutral world has propelled a revolution in the automobile industry, resulting in rising demand for electric vehicles (EVs).
The federal government has been incentivizing this change through subsidies and tax credits, making the EV sector blow up over the past few years.
High-efficiency lithium battery manufacturers catering to electric vehicles have witnessed explosive growth over the past few years as well, thanks to the global shift toward clean-energy automobiles.
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South Korean Battery Maker SK Unlocking Unicorn Status
South Korean battery manufacturer SK on Co. Ltd., a subsidiary of SK Innovation Co. Ltd. and one of the three largest battery makers in East Asia, has been raising funds over the past couple of years and is expected to launch its initial public offering (IPO) shortly. SK Innovation CEO Kim Jun predicts the IPO to be scheduled for on or after 2025.
SK on raised approximately $944 million in May as part of an ambitious plan to expand its global production capacity by over 100% within the next few years. The company raised $800 million in a funding round led by South Korean private equity firm MBK Partners and an additional $144 million from Saudi Arabia's SNB Capital.
"With the latest funding, we plan to boost our battery manufacturing business, including expansion of production facilities overseas," an SK on employee said.
The electric vehicle battery producer, operating across the United States, South Korea, China, and Hungary, has set its sights on boosting its global production capacity to a minimum of 220 gigawatt-hours by 2025, up from 88 gigawatt-hours at the end of the previous year.
SK on has secured over 4.4 trillion won ($3.3 billion) in funding so far this year, surpassing its initial goal of 4 trillion won. In a funding round led by Korea Investment Private Equity and EastBridge Partners in March, SK on secured 1.2 trillion won, while SK Innovation contributed an additional 2 trillion won.
The company also secured a loan of 2 trillion won ($1.5 billion) from Hyundai Motor Co. and Kia Corp. This move follows an announcement made in April by Hyundai and SK on to jointly invest up to $5 billion in the construction of an electric vehicle battery plant in Georgia in the United States.
SK on plans to use the credit to "strengthen critical domestic supply chains and produce high-quality batteries for future Ford and Lincoln electric vehicles," according to BlueOval SK CEO Robert Rhee. BlueOval SK is a joint venture between SK on and Ford Motor Co. F.
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High-Profile Partnerships
In April, SK On, and Hyundai Motor Group formed an agreement to establish a battery manufacturing facility in Georgia to provide batteries for 300,000 electric vehicles each year starting in 2025.
The company also partnered with Ford in 2021 to establish three battery manufacturing facilities in Kentucky and Tennessee. The joint venture is projected to have the combined capacity to produce over 120 gigawatt-hours of batteries each year.
The joint venture is partly funded by the U.S. government, as the U.S. Department of Energy will provide a conditional commitment low-cost loan of up to $9.2 billion to BlueOval SK. This marks the most substantial grant ever awarded through the government's Advanced Technology Vehicles Manufacturing (ATVM) loan program.
Remarkable Production Capabilities
As of 2022, SK on's production capacity amounted to 88 gigawatt-hours, distributed across eight plants in Korea, Hungary, China, and the United States. The company plans to expand its production capacity to at least 220 gigawatt-hours by 2025.
SK on's order backlog stands at approximately 300 trillion won, with major clients such as Hyundai Motor Group, Ford, Volkswagen and Mercedes-Benz Group AG as of May.
Despite its immense manufacturing capabilities, SK has yet to generate profits. The company initially set its sights on achieving profitability for its battery division by the fourth quarter of this year but revised expectations in April, driven by the significant increase in raw material costs and the prolonged global shortage of semiconductor chips. SK On aims to achieve profitability by 2024 despite recording an operating loss of 344.9 billion won in the first quarter of this year.
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