By Baek Byung-yeul
SK Innovation is looking to boost the aggregate power output of its annual battery production for electric vehicles (EVs) to 55 gigawatt hours (GWh) by 2022, 10 times the current 4.7 GWh, according to a local securities company, Tuesday.
"SK Innovation is planning to expand its combined battery power output to 55 GWh by 2022," said Lee Do-yeon, an analyst at Korea Investment & Securities. "To do this, the firm is expected to invest between 3.5 trillion won ($3.1 billion) to 4 trillion won."
"Given the firm's annual EBITDA (earnings before interest, tax, depreciation and amortization) margin is more than 4 trillion won the investment amount is not excessive," said Lee.
The massive investment plan is to meet rapidly growing demand for EV batteries.
Currently, the firm's Seosan plant in South Chungcheong Province has an annual output equivalent to 4.7 GWh batteries.
The firm is building EV battery plants in Hungary and Changzhou, Jiangsu Province in China which will produce 7.5 GWhs of battery output. The Chinese plant is expected to mass produce cells starting 2020 while the Hungarian plant will be completed by 2022.
SK Innovation is also considering building EV plants in the United States and Europe.
The firm said on Nov. 14 that it was chosen as Volkswagen Group's strategic suppliers of EV battery cells. With the contract, SK Innovation will supply batteries for Volkwagen's EVs in North America and Europe.
The German carmaker plans to roll out 50 types of EVs by 2025 and based on this plan, the company will need battery production of over 150 GWh by the target year.
The global battery power demand for EVs was estimated at 35 GWh in 2017 and 191 GWh in 2018, according to industry sources. The figure is expected to increase steeply to 700 GWh by 2025.
Lee presumed the enterprise value of SK Innovation will grow to 33 trillion won by 2022. "The firm is expected to add an enterprise value of 14 trillion won by 2022. Considering its current value, SK Innovation's enterprise value will grow to 33 trillion won by the target year," said Lee.