The South Korean battery market player, SK Innovation, has recently signed a supply contract with China’s smart-carmaker Xpeng Motors, the Chinese media outlet Autohome reported.
“SK Innovation has reached an agreement with Xpeng Motors and will supply electric vehicle batteries produced in its Chinese plants in the near future,” a source revealed.
The batteries will have high-nickel content along with lithium and ion to manufacture them with a higher capacity and be cost-friendly. Such batteries are most demanded by EV producers as they produce high energy density.
While Xpeng Motors is one of the leading EV producers in China, on the other hand, SK Innovation has some of the biggest automotive industry clients, including Volkswagen, Ford, Daimler and Hyundai. The battery producer entered the market in 2005 with the production of hybrid EVs lithium-ion batteries. As SK continues its production, the company will be investing $1.04B in the new manufacturing project.
At present, SK Innovation has manufacturing plants in the home country, China, Hungary and the U.S. The company has previously shown interest in business expansion in China. According to sources, SK Innovation will be opening factories in Huizhou in China. The deal will lead to a battery plant with an annual capacity of 10 GWh. It will be the third battery plant in the country by SK Innovation.
Before the agreement, CATL was the only vendor for Xpeng’s battery requirements. The company also onboarded Eve Energy in March this year, another domestic battery producer in China. With the new contract, SK Innovation adds to the list as the battery source for their EV projects.
The supply of EV by Chinese automakers had started declining earlier this year. This was due to the suddenly skyrocketed prices of semiconductors. The ministry had to impose restrictions to secure stocks of key raw materials, including cobalt, nickel, and lithium, as the country was facing a supply shortage.
The Zhaoqing plant by Xiaofend is underway in the Phase II Factory. As the plant completes, the company expects an increase in the output, almost double the present number. Furthermore, since the G3i and P7 were launched a few weeks ago, there is an expected increase in the vehicle demand followed by increased demand for the battery.
With the new deal, SK innovation anticipates a production capacity of 50GWh in China by 2024. Additionally, the company aims to invest in waste battery recycling where China happens to be one of the top plant locations. Owing to the current plans of SK Innovation, the market may soon witness synergies with battery businesses.