SK Innovation in talks to set up EV battery JVs with Volkswagen, China partners
Published 10-APR-2019 16:58 P.M.
|
4 minute read
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
SK Innovation Co Ltd is in talks to set up separate battery-making joint ventures with Volkswagen AG and Chinese partners, as the South Korean petrochemicals producer aggressively expands its involvement in electric vehicles (EVs) writes Joseph White, Hyunjoo Jin and Heekyong Yang.
The company confirmed talks with Germany's Volkswagen for the first time, telling Reuters the pair were discussing building a factory together. It also said it was on the cusp of agreeing to build a plant in China with undisclosed partners.
The talks come as EV battery makers boost capacity to cope with fast-growing demand, as automakers race to develop vehicles powered by means other than petrol to meet increasingly stringent emissions regulations worldwide.
SK Innovation, South Korea's biggest oil refiner, is a latecomer to a market led by compatriots LG Chem Ltd and Samsung SDI Co Ltd plus Japan's Panasonic Corp. Since starting mass production in 2012, customers have included Germany's Daimler AG as well as Volkswagen.
"Compared with rivals, we've been matching or exceeding investment in the area since last year," YS Yoon, president of SK Innovation's battery business, said in an interview. "We tried to find the right moment for massive investment."
The broader SK Group, South Korea's third-biggest conglomerate, has increased focus on EV batteries as demand slows at memory chip-making unit SK Hynix Inc.
By 2022, SK Innovation plans to spend 4.51 trillion won ($3.95 billion) to boost EV battery capacity. Last month, it broke ground on a $1.7 billion plant in the United States to primarily supply lithium-ion battery cells to Volkswagen. It is also building two factories in Hungary.
"Our strategy is to keep up with technological advancement by having relationships with some of our key customers," Yoon said, adding that "nothing has been decided" regarding a JV with Volkswagen.
The JV would be the first in which Volkswagen, one of the world's biggest automakers, will be co-investing in battery production, similar to the joint battery investment of Panasonic and U.S. EV maker Tesla Inc, analysts said.
"We are considering an investment in a battery manufacturer in order to reinforce our electrification offensive and build up the necessary know-how," Volkswagen said in a statement to Reuters.
In March, Volkswagen Chief Executive Herbert Diess said the automaker was "taking a close look at possible participation in battery cell manufacturing facilities in Europe of our own."
Volkswagen's other suppliers include LG Chem, Samsung SDI and China's Contemporary Amperex Technology Co Ltd.
"There are so many battery requirements from Volkswagen," Yoon said. "So I think it is natural for Volkswagen to have multiple suppliers even if it has joint ventures with some."
SECOND CHINA PLANT
Separately, SK Innovation plans to soon sign a deal to build its second EV battery factory in China, the world's biggest EV market, Yoon said, without identifying the local partners.
The firm broke ground in August on its first Chinese plant under a joint venture with Beijing Electronics Holding Co Ltd and BAIC Motor Corp Ltd, with investment reaching 5 billion yuan ($744.30 million) by 2020.
SK Innovation had aimed to begin construction in 2016, but postponed as EVs equipped with Korean batteries were not included on a government list of EVs eligible for subsidies.
"We hope China's market opens up in 2021" when the subsidies are phased out, Jay Rhee, SK Innovation's head of battery research and development, said in a separate interview.
COBALT CULL
Meanwhile, SK Innovation is in the industry-wide race to reduce batteries' cobalt content, with Panasonic in May saying it was working on a cobalt-free battery. The mineral is mined in harsh conditions and subject to significant price fluctuation.
The firm plans to start production of batteries containing 5 percent cobalt in 2022 from 10 percent at present, Rhee said.
Cobalt is primarily mined in the Democratic Republic of Congo, but SK Innovation is also sourcing cobalt from Australia and extracting the mineral from waste batteries, Yoon said.
"I expect we won't need to secure fresh cobalt after 2025," Yoon said.
Reporting by Joe White, Hyunjoo Jin and Heekong Yang; Additional reporting by Edward Taylor
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.