|SKI's battery business chief Ji Dong-sup, right, shakes hands with EcoProBM Chairman Lee Dong-chae, after EcoProBM signed a three-year deal to supply key materials for SKI's high-nickel batteries at SK headquarters, downtown Seoul, Thursday. Courtesy of SKI|
By Kim Yoo-chul
SK Innovation (SKI), the country's leading battery producer, is considering building its second overseas battery plant in Europe in collaboration with U.S. carmaker Ford, according to industry sources, Thursday.
Romania, Hungary and Poland are viewed as the top candidates for the SKI-Ford project, which is expected to cost around 11 trillion won, with Hungary gaining an edge over the two other eastern European countries because SKI has operations there, they said.
"SKI and Ford are set to announce a plan to establish a joint venture in Europe sometime in October, at the earliest possible date," one source said. Regarding the specifics, SK officials declined to comment.
It's very feasible that the two companies will sign a memorandum of understanding (MOU) regarding the venture in Europe, because Ford has aggressively pursued its vehicle electrification strategies focusing on the United States and Europe.
The forthcoming deal will include a 50:50 joint venture to produce fuel cells for electric vehicle (EV) batteries, because SKI is one of the most valued battery partners from Ford's standpoint, one source told The Korea Times. Ford, the No. 2 U.S. automaker, has plants in Germany, Turkey and Romania, while SKI is on track to build its third battery plant in Hungary.
Last month, Ford announced it was seeking to build a battery plant in Europe.
A number of European countries, such as the U.K. and Spain, are said to have submitted proposals to attract the plant. However, given various financial, administrative benefits and competitive labor costs proposed by eastern European countries, the two companies are "very near" selecting one of the aforementioned eastern European countries as their location for the venture, said the sources.
SKI's aggressive battery expansion plan came after it settled a multi-billion-dollar lawsuit with LG Energy Solution (LGES) in the United States. SKI is supplying EV batteries to Ford and Volkswagen.
On a related note, EcoProBM, Korea's top producer of materials for use in EV batteries, signed a three-year deal with SKI under which the local parts supplier will provide key materials for SKI's high-nickel batteries. In a regulatory filing, EcoProBM said it will sell high-nickel NCM cathode materials to SKI throughout 2024.
SKI's share price fell by 1.39 percent to 248,000 won, while news of the battery materials deal with SKI boosted EcoProBM's stock, whose price surged 6.21 percent to 357,600 won, Thursday, data from Korea Exchange (KRX), showed.