By Heekyung Yang
SEOUL (Reuters) – South Korean electric vehicle battery maker SK ON is in talks with automakers to supply prismatic batteries and expand its existing pouch battery range, a senior company executive said, as it struggles to improve performance amid slowing global demand for electric vehicles.
SK ON, a unit of energy conglomerate SK Innovation that supplies Ford Motor Co. (NYSE:F), Hyundai Motor Co. (OTC:O), Volkswagen (ETR:EV) and others, is talking to several automakers looking to strike deals to supply Prismatic batteries, according to SK ON chief spokesman Ko Chang-kook.
“We are in talks with automakers who will take our prismatic batteries… and now we will have the opportunity to diversify our product portfolio sooner rather than later,” Ko told Reuters.
Koo did not disclose the names of the automakers, but said the company has already completed the prismatic battery technology and is ready to start production of prismatic batteries once discussions are completed.
There are three types of lithium-ion batteries currently used in electric vehicles – prismatic, cylindrical, and pocket, all of which are essentially similar in function, but each has its pros and cons.
Prismatic and cylindrical batteries are encased in solid materials. Bag batteries use flexible, hermetically sealed foils and are protected by thin metal bags. SK On currently produces bag batteries for electric vehicles only.
While the company has secured prismatic battery technology, it is also looking to develop cylindrical batteries, widely known as the type used by Tesla (NASDAQ:).
Asked if SK On, which has never turned a profit since its spinoff from SK Innovation in late 2021, plans to cut its capital spending this year, Koo said SK On is not considering that at the moment, adding that it will not cut R&D spending.
Earlier this year, SK Innovation, the parent company of SK.ON, said it had budgeted about 9 trillion won ($6.55 billion) for capital expenditure this year, with more than 80 percent of it allocated to SK.ON.
Rival LG Energy Solution (LGES) said in April it plans to cut capital spending this year due to slowing demand for electric vehicles. Last month, LGES halted part of the construction of a multibillion-dollar battery plant in the U.S. state of Arizona as it flexibly adjusts the pace of planned investment to improve its operations.
In April, SK ON said it remained on track to break even in the second half of this year. This month, the company said it would implement sweeping cost cuts, including a pay freeze for all executives, until the company is profitable.
SK Innovation is expected to seek a merger with profitable gas subsidiary SK E&S to help bolster SK On, local media reported.
SK Innovation said in a regulatory filing on Friday that it will hold a board meeting next Wednesday to discuss various strategic measures, including mergers, to strengthen its competitiveness, but no decision has been made on anything.
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