SK Innovation is in talks to establish separate battery-making joint ventures with Volkswagen AG and Chinese partners, as the petrochemicals producer progressively expands its contributions in electric vehicles (EVs).
The company verified talks with Germany’s Volkswagen for the first time, informing Reuters the pair were talking about building a factory together. It also stated it was on the cusp of agreeing to construct a plant in China with undisclosed partners.
The talks come as EV battery makers increase capacity to cope with fast-growing demand, as automakers race to develop vehicles functioned by means other than petrol to meet progressively stringent emissions regulations worldwide.
SK Innovation, South Korea’s biggest oil refiner, is a latecomer to a market led by compatriots LG Chem and Samsung SDI plus Japan’s Panasonic. Since starting mass production in 2012, consumers have included Germany’s Daimler and Volkswagen.
“Compared with competitors, we’ve been matching or exceeding investment in the area since last year,” YS Yoon, president of SK Innovation’s battery business, stated. “We tried to find the right moment for massive investment.”
The broader SK Group, South Korea’s third-biggest corporation, has boosted focus on EV batteries as demand reduces at memory chip-making unit SK Hynix Inc.
By 2022, SK Innovation plans to invest 4.51 trillion won ($3.95 billion) to increase EV battery capacity. Last month, it broke ground on a $1.7 billion plant in the United States to mainly supply lithium-ion battery cells to Volkswagen. It is also constructing two factories in Hungary.