South Korean energy group SK Innovation's battery segment's operating loss narrowed from a quarter earlier alongside higher revenue as the group advances its US energy storage systems (ESS) battery developments.
SK Innovation's revenue from its battery business during April-June rose by 31pc on the year and by 36pc against a year earlier to W2.11 trillion ($1.51bn), owing to improved production rates at its US and European plants and strong sales volumes, according to its latest quarterly earnings.
The company did not disclose its production figures. It had a total of 111GWh/yr of battery production capacity in 2024, which is expected to rise to 192GWh/yr this year. The US will see the greatest addition in capacity, up from 22GWh/yr in 2024 to 59GWh/yr this year, followed by China that will grow from 45GWh/yr last year to 78GWh/yr this year.
Operating losses for its battery business in April-June came in at W66.4bn, narrowing from about W299.3bn a quarter earlier, and drastically lower compared to W460.1bn a year earlier, with a higher contribution of W273.4bn from the 45X advanced manufacturing production credit (AMPC), given strong US demand. The AMPC, introduced under the 2022 US Inflation Reduction Act, is a production tax credit that subsidises companies that manufacture certain goods, including battery components and critical minerals, in the US.
US president Donald Trump's sweeping new legislation, the One Big Beautiful Bill Act, was criticised by industry groups and is set to stall the US' electric vehicle transition. The AMPC credit, which has been propping up SK Innovation's battery business' profit, is poised to be phased out after a few years, under the act.
The group only started preparing to tackle the ESS market this year and zoned in on US as the target market for its expansion, where the production of its ESS lithium-iron-phosphate batteries will take place, according to the group's battery-making subsidiary SK On. Discussions regarding volume for its supply agreements in the US are underway, said SK On during the latest earnings call, but it refrained from disclosing further details.
SK On is not currently observing shrinking production and sales of EVs that use its batteries in the North American region, with EV companies in the region holding back from raising vehicle prices, the company added.
