South Korea's SK On in talks to supply prismatic EV batteries as it seeks turnaround
By Heekyong Yang
SEOUL, July 13 (Reuters) -South Korean EV battery maker SK On is in talks with automakers to supply prismatic batteries, expanding from its existing pouch-type batteries, a senior executive said, as it scrambles to turn around amid slowing global electric vehicle (EV) demand.
SK On, a unit of energy group SK Innovation 096770.KS, which supplies EV batteries to Ford Motor F.N, Hyundai Motor 005380.KS, Volkswagen VOWG_p.DE among others, is speaking to multiple automakers that are looking to line up prismatic battery supply deals, SK On chief spokesperson Ko Chang-Kook said.
"We are having talks with automakers who will take our prismatic batteries ... we will now have the opportunity to diversify our product portfolios sooner than later," Ko told Reuters.
Ko did not disclose the names of automakers but said the company has already completed the prismatic battery technology and is prepared to start producing prismatic batteries once discussions are finalized.
There are three types of lithium-ion batteries currently used in EVs - prismatic, cylindrical and pouch-type, all of which are fundamentally the same in functionality, but each has pros and cons.
Prismatic and cylindrical batteries are cased in hard materials. Pouch-types use sealed flexible foils and are protected by thin metal bags. SK On currently produces only pouch-type batteries for EVs.
While the firm secured prismatic battery technology, it is also looking to develop cylindrical-type batteries, widely known for the type used by Tesla TSLA.O.
When asked if SK On, which has never made a profit since it was split off from SK Innovation in late 2021, plans to cut its capital expenditure for the year, Ko said SK On is not considering that for now, adding it will not cut research and development spending.
Earlier this year, SK On's parent SK Innovation said it had a capital spending budget of about 9 trillion won ($6.55 billion) for this year, with more than 80% allocated for SK On.
Cross-town rival LG Energy Solution (LGES) 373220.KS said in April it plans to minimise capital expenditure this year due to slowing EV demand. Last month, LGES paused part of construction of its multi-billion dollar battery factory in the U.S. state of Arizona as it adjusts the pace of planned investment execution flexibly to optimize its operations.
In April, SK On said it was still on target to break even in the second half of this year. The company said this month it would implement across-the-board expense cuts, including freezing salaries of all executives until the firm turns a profit.
SK Innovation is expected to pursue a merger with profitable gas affiliate SK E&S to help prop up SK On, local media outlets have reported.
On Friday, SK Innovation said in a regulatory filing that it would hold a board meting next Wednesday to discuss various strategic measures, including mergers to strengthen its competitiveness, but nothing has been decided.
($1 = 1,374.4200 won)
Reporting by Heekyong Yang; Editing by Sandra Maler
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