SK On, a subsidiary of South Korean energy group SK Innovation [096770:KS], plans to produce a new lithium-iron-phosphate (LFP) electric vehicle (EV) battery by 2025, with the aim of delivering lower-cost batteries to automakers struggling with rising EV costs, as reported by Reuters on January 5. The cost advantage of LFP batteries depends on where they are produced. LFP batteries made in China can have a 20% cost advantage over nickel cobalt batteries, and LFP batteries produced in Europe can cost 15% less. LFP batteries are known for their long lifespan and stability, with high thermal and chemical stability, which makes them suitable for a wide range of applications including electric vehicles, power tools, energy storage systems, and more.
SK On plans to source its LFP batteries initially from China while investing in new battery plants in the US. By 2026, the company expects to have 150 gigawatt-hours (GWh) of capacity. SK On does not expect oversupply in the near future, as its new factories have been built with guarantees from automakers that they will purchase the batteries. However, raising the capital required to fund investments in capacity and new chemicals is one of the company’s main challenges for this venture.