Emphasizing the First Year for Visible Achievements in Secondary Batteries and Renewable Energy
Active Research and Development and Overseas Factory Construction
[Asia Economy Reporter Donghoon Jung] "Through the growth of the battery business, which is gathering company-wide capabilities, we will achieve a profitability improvement this year that is recognized in the market."
This is the ambition of Kim Jun, Vice Chairman of SK Innovation, who is strongly driving eco-friendly businesses including the battery business this year.
On the 26th, Vice Chairman Kim expressed this determination through SK Innovation's official internal news channel, SKinno News, marking the 60th anniversary of the SK Innovation group and the first year of executing the 'Financial Story.' Kim emphasized that "SK Innovation group companies must produce execution results that earn recognition and trust from their respective markets and stakeholders as 'eco-friendly energy and materials companies,'" highlighting this year as the first year to achieve visible results in areas such as secondary batteries and renewable energy.
SK Innovation has established its own direction as a 'portfolio designer & developer.' The plan is for SK Innovation to act as a de facto intermediate holding company in the eco-friendly energy and materials sectors, which will be future growth engines such as battery recycling and next-generation batteries. SK Innovation will take charge of research and development (R&D), business development, and mergers and acquisitions (M&A) to support each business company and maximize their capabilities. SK Innovation recently participated in the world's largest IT and electronics exhibition, CES 2022, unveiling future eco-friendly innovative technologies including new secondary battery products for electric vehicles that can contribute to reducing 11 million tons of carbon annually from 2030.
Group-level R&D support is also extensive. SK Group announced the day before that it will invest about 1 trillion KRW to establish a research facility for eco-friendly business sectors on a site of approximately 99,000㎡ (about 30,000 pyeong) in Bucheon New Town, Gyeonggi Province. In addition to SK Innovation, seven companies including ▲SK Energy ▲SK Geocentric ▲SK On ▲SK E&S ▲SKC ▲SK Materials will house about 3,000 personnel engaged in next-generation battery and semiconductor materials, carbon reduction and capture, renewable energy, and hydrogen eco-friendly technology development.
The biggest pillar of growth this year is, of course, the battery business. The battery business division has shown an annual growth rate of about double each year. It recorded 348.2 billion KRW in 2018, 970.7 billion KRW in 2019, and surpassed 1 trillion KRW with 1.6102 trillion KRW in 2020. Last year, it recorded 1.9727 trillion KRW by the third quarter alone, already exceeding the previous year's sales. The total sales for last year are estimated to be close to 3 trillion KRW. Securities firms and the industry expect SK Innovation's battery business to exceed 6 trillion KRW in sales this year and succeed in turning profitable.
Construction of overseas factories to increase production capacity is also active. After completing the first plant in Georgia, USA last year, the second plant is currently under construction. The battery production joint venture in the US, BlueOvalSK, established with Ford, plans to jointly invest about 8.9 billion USD (approximately 10.6 trillion KRW) by 2027 to build a 129-gigawatt-hour (GWh) scale factory. New second plants are also planned in Hungary and China. This year, mass production is expected to start at the US first plant and Hungary second plant, with supply continuing to Hyundai Motor, Daimler, Ford, and Volkswagen.
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