The landscape of the electric vehicle (EV) market is constantly evolving, with new players entering the scene and existing ones striving to maintain their competitive edge. South Korean EV battery maker SK On, a unit of energy group SK Innovation, is facing challenges amid slowing global EV demand. In an effort to adapt to the changing market conditions, SK On is exploring the possibility of supplying prismatic batteries to automakers, expanding its product portfolio beyond pouch-type batteries.
Unlike the traditional pouch-type batteries that SK On currently produces for EVs, prismatic batteries offer a different form factor with their cased hard materials. By venturing into the prismatic battery market, SK On aims to diversify its product offerings and cater to the needs of automakers who prefer this type of battery design. This strategic move highlights the company’s commitment to innovation and flexibility in responding to market demand.
Technological Advancements
SK On has already completed the development of prismatic battery technology and is prepared to commence production once talks with automakers are finalized. In addition to prismatic batteries, the company is also looking into developing cylindrical-type batteries, similar to those used by Tesla. This demonstrates SK On’s ambition to stay ahead in technological advancements and embrace different battery formats to meet the diverse requirements of EV manufacturers.
Financial Sustainability
Despite facing profitability challenges since its inception, SK On remains focused on maintaining its research and development spending. The company’s parent company, SK Innovation, has allocated a significant portion of its capital expenditure budget to SK On, reflecting a long-term commitment to the EV battery business. While competitors like LG Energy Solution have opted to minimize capital expenditure due to slowing EV demand, SK On is staying the course and aiming to break even in the second half of the year.
To address its financial challenges, SK On has implemented cost-cutting measures, including freezing the salaries of all executives until the company turns a profit. Additionally, there have been rumors of a potential merger between SK Innovation and profitable gas affiliate SK E&S to support SK On’s operations. The upcoming board meeting to discuss strategic measures, including potential mergers, highlights SK Innovation’s proactive approach to strengthening its competitiveness in the EV battery market.
SK On’s journey in the EV battery market is fraught with challenges and opportunities. By venturing into prismatic batteries and embracing technological advancements, the company is positioning itself for long-term success. With a commitment to innovation, financial sustainability, and strategic partnerships, SK On is poised to navigate the evolving EV landscape and emerge as a key player in the industry.