South Korean electric vehicle (EV) battery maker SK On is in discussions with automakers to supply prismatic batteries, branching out from its current production of pouch-type batteries, a senior executive said on Monday. This move comes as the company seeks to navigate a challenging market with slowing global EV demand.
SK On, a unit of energy group SK Innovation, supplies EV batteries to Ford Motor, Hyundai Motor, and Volkswagen, among others. Chief spokesperson Ko Chang-Kook stated, “We are having talks with automakers who will take our prismatic batteries… we will now have the opportunity to diversify our product portfolios sooner than later.”
Ko did not disclose the names of the automakers involved but confirmed that the company has completed prismatic battery technology and is ready to commence production once agreements are finalized.
Currently, there are three types of lithium-ion batteries used in EVs: prismatic, cylindrical, and pouch-type. While all three types function similarly, each has distinct advantages and disadvantages. Prismatic and cylindrical batteries are encased in hard materials, while pouch-type batteries, which SK On currently produces, use sealed flexible foils protected by thin metal bags.
In addition to securing prismatic battery technology, SK On is also developing cylindrical-type batteries, widely used by Tesla.
When asked about potential cuts to capital expenditure for the year, Ko responded, “SK On is not considering that for now,” and emphasized that research and development spending would not be reduced.
Earlier this year, SK On’s parent company SK Innovation announced a capital spending budget of approximately 9 trillion won ($6.55 billion) for 2023, with over 80% allocated to SK On. Despite this, cross-town rival LG Energy Solution (LGES) indicated in April that it plans to minimize capital expenditure due to the slowing EV demand. Last month, LGES halted part of the construction of its multi-billion-dollar battery factory in Arizona to optimize its investment pace.
In April, SK On stated it was on track to break even in the second half of this year. This month, the company announced across-the-board expense cuts, including freezing executive salaries until profitability is achieved.
Local media has reported that SK Innovation might pursue a merger with profitable gas affiliate SK E&S to support SK On. On Friday, SK Innovation disclosed in a regulatory filing that its board would meet next Wednesday to discuss various strategic measures, including potential mergers to enhance competitiveness, but no decisions have been made yet.
