SK on secures battery orders for 20 mn electric vehicles as of last year

SK innovation Co. battery plant under construction in Georgia, U.S. [Courtesy of SK innovation]

SK on Co., the electric vehicle (EV) battery subsidiary of South Korea’s SK innovation Co., has secured battery orders amounting to 2,059 gigawatt-hours (GWh) as of the end of last year. It is the first time that the company’s order backlog has been disclosed in GWh units, with each GWh of battery being sold for about 140 billion won ($110 million).

SK on has already secured enough orders to supply batteries for two million high-performance EVs, given that SK on’s flagship battery product for the Ford F-150 Lightning pickup truck requires 105 kWh of power per vehicle.

To meet the growing demand for EV batteries, SK on is actively expanding its market presence with facility expansion worldwide.

The company operates factories in Seosan, Korea, and Changzhou, Huizhou, and Yancheng in China. It is also building factories in Kentucky and Tennessee in the U.S. jointly with Ford, with an annual production capacity of 129 GWh. Two factories are also under construction in Georgia with a combined production capacity of 21.5 GWh.

Based on the disclosed order backlog of 290 trillion won at the end of last year, SK on’s average selling price (ASP) for EV and energy storage system (ESS) batteries can be estimated at about 140 billion won per GWh.

According to market research firm SNE Research, the average battery ASP in 2021 was around $143 million per GWh. In the battery industry, Samsung SDI reportedly maintains the highest battery ASP, followed by LG Energy Solution and SK on.

SK on is known to have a lower battery ASP, about 10 to 20 percent lower compared to its competitors, according to industry insiders.

As a late entrant into the battery business compared to LG Energy Solution and Samsung SDI, SK on strategically adjusts its battery ASP to penetrate the expanding market, while aiming to solidify its position by forming joint ventures with automotive manufacturers and establishing a stable supply chain.

The choice of automotive manufacturers as battery clients can also influence the battery ASP.

For example, Hyundai Motor Group is known for having stringent requirements, including battery ASP control. Luxury brands such as BMW are associated with higher battery ASPs.

An industry insider said that currency exchange rates and the proportion of battery cell, module, and pack sales can lead to variations in the average selling price.