South Korean EV battery maker SK On is in negotiations with automakers to supply prismatic batteries, expanding from its current focus on pouch-type batteries. This move comes as the company, a unit of SK Innovation, seeks to navigate the challenges posed by slowing global electric vehicle (EV) demand.
SK On, which supplies EV batteries to major automakers such as Ford, Hyundai, and Volkswagen, is engaged in discussions with multiple car manufacturers regarding prismatic battery supply deals. “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,” said SK On chief spokesperson Ko Chang-Kook.
While Ko did not disclose the names of the automakers involved in the talks, he confirmed that SK On has completed the development of prismatic battery technology and is ready to commence production once agreements are finalized. Prismatic batteries, along with cylindrical and pouch-type batteries, are the three main types of lithium-ion batteries used in EVs, each with its own advantages and disadvantages.
Prismatic and cylindrical batteries are encased in hard materials, whereas pouch-type batteries use sealed flexible foils and are protected by thin metal bags. Currently, SK On produces only pouch-type batteries for EVs. However, the company has also secured prismatic battery technology and is exploring the development of cylindrical-type batteries, which are widely used by Tesla.
When asked about potential capital expenditure cuts, Ko stated that SK On has no plans to reduce its investment for the year. He emphasized that the company will maintain its research and development spending. Earlier this year, SK On’s parent company, SK Innovation, announced a capital spending budget of approximately 9 trillion won ($6.55 billion) for this year, with more than 80% allocated to SK On.
In contrast, SK On’s rival, LG Energy Solution, announced in April that it would minimize capital expenditure due to slowing EV demand. Last month, LGES paused part of the construction of its multi-billion dollar battery factory in Arizona, adjusting the pace of its planned investments to optimize operations.
Despite the challenging market conditions, SK On remains optimistic about its financial outlook. In April, the company reiterated its target to break even in the second half of this year. This month, SK On announced cost-cutting measures, including freezing executive salaries until the company turns a profit.
To bolster SK On’s financial position, SK Innovation is reportedly considering a merger with its profitable gas affiliate, SK E&S. On Friday, SK Innovation disclosed in a regulatory filing that it would hold a board meeting next Wednesday to discuss various strategic measures, including potential mergers to enhance its competitiveness. However, no final decisions have been made.