SK plans Chinese EV battery component plant

South Korean refiner SK Innovation plans to build a battery separator plant in southeast China's Jiangsu province to capitalise on fast-growing demand in the world's biggest market for electric vehicles (EVs).

The Changzhou plant will start full-scale production of lithium-ion battery separators (LiBS) and ceramic-coating membrane separators (CCS) in 2020, SK said. Construction is scheduled to begin next year, with investment estimated at 400bn won ($353mn).

SK said the plant will have capacity to produce 340mn m²/yr of LiBS and 130mn m²/yr of CCS. This will take SK overall LiBS capacity to 850mn m²/yr, advancing its goal of rising to No. 1 from No. 2 among the world's largest makers of the EV battery component.

SK is following the same strategy as rival South Korean battery producer LG Chem in making EV production footholds in South Korea, Europe, China and the US, although the company has yet to firm up plans for a US battery plant. LG Chem is expanding its EV battery plant in Poland, while SK and Samsung SDI chose Hungary for their European production bases.

SK will build key battery components in China, rather than completed batteries, as it looks to overcome a competitive disadvantage.

China's consumer EV subsidies are among the most generous in the world, but since 2016 Beijing has excluded cars equipped with South Korean batteries from qualifying for the programme. The move has protected Chinese battery producers from fierce competition. China accounted for about 58pc of the 1mn EVs sold globally last year.

The marketplace possibly could become more even in 2020 when China's EV subsidies are scheduled to expire.

SK has been producing LiBS in South Korea since 2005. The Chinese project marks the company's first overseas LiBS plant. The component maintains stability between an EV battery's anode and cathode materials, increasing output.

SK possibly has a built-in customer for at least some of the new factory's output. Operations are scheduled to start up around the same time that SK's joint venture with China's BAIC Group and Beijing Electronics Holding opens a new battery plant in Changzhou. The venture will have 7.5GWh of annual production capacity, enough to make power packs for 250,000 vehicles with 30kWh batteries. The company plans to have 20GWh of global battery capacity when the Changzhou plant opens in late 2019 and to reach 50GWh by 2025.