SK to supply Volkswagen EV batteries in Europe, US

South Korea's SK Innovation has formed a strategic partnership with Germany's Volkswagen to supply batteries for the European automaker's rapidly expanding lineup of electric vehicles (EVs).

SK will join its South Korean rivals LG Chem and Samsung SDI, which previously signed contracts with Volkswagen, in supplying batteries for the carmaker's European-built EVs. But SK's deal is potentially much bigger because the firm also will supply batteries for Volkswagen's North American EVs.

SK and Volkswagen plan to jointly build a large-scale battery plant in the US that will start supplying the carmaker's EVs in North America by 2022. No site has been selected and the cost and production capacity of the plant have not been determined, SK said. Pricing and battery volumes are flexible, as in the LG Chem and Samsung SDI deals.

Volkswagen said it has teamed up with a strong line of battery-supply partners as it plans to introduce 50 new EV models under its various nameplates by 2025. The company expects to need more than 150GWh/yr of battery capacity to equip its EV fleet.

The three South Korean companies will ensure adequate battery supplies for Volkswagen's EVs in Europe from 2019, while SK will cover the North American market from 2022 and China's CATL will supply its cars in the Chinese market from next year, it said.

SK plans to have 20GWh of global EV battery capacity by the end of 2019, when plants in Hungary and China are scheduled to open. The company is targeting production capacity of 50GWh/yr by 2025, which will be enough to equip nearly 1.7mn EVs with batteries.

The number of electric vehicles in use globally rose by 54pc in 2017 to 3.1mn, led by gains in China. The International Energy Administration predicts the total will climb to about 125mn by 2030.