SK Innovation Co., Ltd, Seoul, Korea, made a bold decision to invest in the battery industry, a future growth driver, from the beginning of this year, reflecting its determination to bravely tackle the current crisis caused by the unprecedented COVID-19 pandemic. The company intends to further secure its production base in Europe, which is one of the major car markets and where global car companies are present.
Holding a board of directors meeting on January 28, SK Innovation (CEO: Kim Jun) resolved to make new investments in the battery industry, the core of its “green-centered deep change” policy. Thus, it will invest USD 1.148 billion (about KRW 1.27 trillion) in SK Battery Hungary (SKBH) to build a new factory in Europe.
This factory is expected to be constructed in Iváncsa, Hungary, with a production capacity of 30 GWh per year (it will be possible to supply batteries for approximately 430,000 cars based on 70 kWh per charging with over 400 km drive). The first and second European plants are also located in Hungary (Komárom), and the expected third plant will be the largest in investment scale.
SK Innovation secured an area of about 700,000 m2 (about 210,000 pyeong), which is equivalent to 98 football stadiums.
For this third European plant, which will be a long-term project, of which construction will be commenced in the third quarter this year and will last until 2028, a total of USD 2.29 billion (about KRW 2.6 trillion) is expected to be spent as construction cost. This is half of the anticipated total investments. The company plans to finance the project externally according to its construction schedule.
SK Innovation top management held a video conference with the Hungary government to formalize this investment on January 29, where Szijjártó Péter (Minister of Foreign Affairs and Trade), Ésik Róbert (Head of Hungarian Investment Promotion Agency), Kim Jun (CEO of SK Innovation), and Jee Dong-seob (President of SK Innovation’s Battery Business) were present.
Located 50 km southwest of Budapest, Iváncsa is equipped with smooth logistics infrastructure, such as railroads and roads; abundant workforce, as it is near the big city; and all other sorts of infrastructure, which led the city to become the site of SK Innovation’s new project.
With the investment decision this time, SK Innovation came closer to its mid- and long-term goal to become a leading global EV battery company with a production capacity of “125 GWh+α per year by 2025.”
As the company made investments of which scale was around 10 GWh adjusting to the orders in the past, the size of the investment decision made this time, 30 GWh, is noticeable. This reflects the level of SK Innovations’ determination to become a leading global player by securing its competitiveness and actively taking orders in the rapidly growing EV market environments.
Thanks to this investment, the company will be able to proactively cope with the battery demands in the European markets, which are expected to increase more than six times to 256 GWh in 2025 from the current 41 GWh. Focusing on the EV battery industry, which fits the best the European Green Deal policy, SK Innovation plans to expedite its vision of “Green Balance 2030,” the core of its ESG management.
Kim Jun, CEO of SK Innovation said, “Business conditions are not favorable because of the COVID-19 pandemic, but we made a bold investment decision for our future to grow the green mobility business and thus complete the ESG management together with our successful financial story. The investment decision made this time will lead the battery business of SK Innovation to greatly contribute to the value chains and ecosystem and to become a leading global company in the global EV industry.”