SK Innovation to invest $490m in second Chinese component plant

Source:Reuters-Global Times Published: 2019/5/18 20:53:39

South Korea's SK Innovation said on Wednesday that it plans to invest 579.9 billion won ($488.3 million) to build its second China factory for electric vehicle (EV) batteries, in a bet that China will open up its market to South Korean battery makers.

The latecomer to the sector is aggressively expanding its production capacity globally, starting to build new factories in Hungary, China and the US since last year with a total investment of 5 trillion won.

SK Innovation said its second China factory aims to meet rising orders for EV batteries globally, without elaborating on its Chinese partner, the site and capacity of the proposed plant.

SK Innovation is in talks to set up separate battery-making joint ventures with Chinese partners and Volkswagen, citing the president of the Korean company's battery business.

Currently, vehicles equipped with South Korean batteries are not eligible for government subsidies in China.

But South Korean battery makers including LG Chem have in recent months announced investment plans to expand capacity in China, hoping that China's plan to phase out subsidies by 2020 would create a level playing ground.

SK Innovation broke ground in August 2018 on its first Chinese plant under a joint venture with Beijing Electronics Holding Co and BAIC Motor Corp, with investment set to reach 5 billion yuan ($744.3 million) by 2020.

Automakers are under pressure to deliver EVs because China has set quotas for sales of new-energy vehicles (NEVs). China wants NEVs - which also include hybrids, plug-in hybrids and hydrogen fuel cell vehicles - to account for one-fifth of auto sales by 2025, compared with 5 percent now.

SK Innovation's customers include Germany's Daimler and Volkswagen and South Korea's Hyundai Motor.

SK Innovation was sued in April by its bigger rival LG Chem in the US for alleged theft of trade secrets. SK Innovation has denied the allegations.

Posted in: COMPANIES

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