South Korean battery manufacturer SK On is planning to produce a new, lithium-iron-phosphate (LFP) electric vehicle (EV) battery by 2025, a senior executive of the company said on Thursday.
The move is part of the company’s effort to deliver lower-cost batteries to automakers as rising EV costs squeeze demand. LFP batteries can be produced at lower cost, but deliver less range than comparable nickel-cobalt EV batteries.
“We’re going to produce an LFP product by 2025,” Jason Lee, executive vice president and head of SK On’s battery marketing division, said on the sidelines of the CES conference in Las Vegas. SK On is a subsidiary of South Korean energy group SK Innovation.
SK On customer Ford said last year it plans to offer Chinese-made lithium iron batteries from CATL in its Ford F-150 Lightning electric truck next year. Tesla and EV startup Rivian also have announced plans to use LFP batteries.
The cost advantage from lithium-iron chemistry depends on where the batteries are made, Lee said.
LFP batteries made in China can cost 20% lower than nickel cobalt batteries, while those produced in Europe can cost 15% less, he said.
Chinese battery makers dominate world LFP production, supported by strong demand from home-market automakers.
SK On plans to source its LFP batteries initially from China, Lee said.
“If you produce in the United States, there is no benefit,” he said.
Meeting US EV subsidy requirements
SK On is investing in new US battery plants and by 2026 expects to have 150 gigawatt-hours of capacity.
Lee said those investments, as well as investments in US production of cathodes should allow SK On’s US customers to meet domestic content requirements attached to US EV subsidies.
Battery makers and automakers are expanding EV battery capacity globally, and some industry analysts have questioned whether that could result in oversupply. Lee said he does not expect oversupply in the near future. SK On’s new factories have been built with guarantees from automakers that they will take the batteries, he said.
Raising the capital required to fund investments in capacity and new chemistries is one of SK On’s main challenges, Lee said.
“We are thinking about raising more capital,” Lee said.
- Reuters, with additional editing by Vishakha Saxena