According to a senior executive of the company, SK On of South Korea plans to start making a new lithium-iron-phosphate electric vehicle battery by 2025 as part of an effort to provide cheaper batteries to automakers under pressure from rising EV costs.
“We’re going to produce an LFP product by 2025,” In an interview with Reuters on the sidelines of the CES conference, Jason Lee, executive vice president and head of SK On’s battery marketing division, said. A division of the South Korean energy company SK Innovation (096770. KS), SK On.
Ford Motor Co. (F.N), a client of SK On, announced last year that it would use lithium iron batteries made in China by CATL (300750. SZ) in its electric Ford F-150 truck starting in 2019. Additionally, plans to use LFP batteries have been made public by EV startups Rivian (RIVN.O) and Tesla Inc (TSLA.O).
Chinese battery manufacturers dominate the global LFP market thanks to high domestic automaker demand. Although LFP batteries can be made more affordably than comparable nickel-cobalt EV batteries, they have a shorter range.
According to Lee, the location of battery production affects the cost-benefit of lithium-iron chemistry. Chinese-made LFP batteries maybe 20% less expensive than nickel-cobalt batteries. He claimed that LFP batteries made in Europe could cost 15% less.
According to Lee, SK On intends to buy its LFP batteries initially from China.
“If you produce in the United States, there is no benefit,” he said.
SK On is investing in brand-new U.S. battery plants and by 2026 expects to have 150 gigawatt-hours of capacity. As well as investments in the United States, Lee said these investments. production of cathodes should allow Customers in the U.S. of SK On must adhere to U.S. EV subsidies.
Globally, battery manufacturers and automakers are increasing the capacity of EV batteries, raising the possibility of an oversupply, according to some industry analysts. In the near future, according to Lee, there won’t be an oversupply. According to him, SK On’s new factories have been constructed with assurances from automakers that they will accept the batteries.
One of SK On’s biggest challenges, according to Lee, is finding the funding necessary to finance investments in capacity and new chemistries.
“We are thinking about raising more capital,” Lee said.