SK Innovation has stated that it will split its rapidly-growing battery business as it focuses on the rising demand for electric vehicles. The split is likely to make the battery and oil businesses as new and individual entities to further fuel their growth.
As per the company’s statement, it is awaiting the approval of general shareholders and will then constitute SK Battery and SK E&P on October 1.
The company’s future plans
SK Innovations intends on lifting the battery capacity to 200 gigawatt-hours by 2025 from the present 40 GWh. By the end of the decade, the company aims to produce 500 GWh. The company plans to invest 30 trillion won through 2025 to reach net-zero emissions by 2050.
The split makes it simpler for the business to raise funds for its expansion.
Company sees a fall in shares
However, shares of the company fell as low as 7.9% in the early Seoul trading, making it the most significant intraday decline since July 1 when SK Innovations had announced that it was considering splitting the battery business.
SK Innovations added, “The decision to split the businesses is to set up a management system that will help to strengthen their competitiveness. They will be able to better respond to the business environment to make timely investment decisions.”
SK Battery’s and SK E&P’s prime focus
The company’s press release envisions SK Battery to focus on midsized and sizeable electric vehicle batteries, battery rental service, battery metal recycling, and energy storage systems businesses. At the same time, SK E&P will concentrate on the carbon capture and storage business on top of its current oil exploration and production business. SK Innovation will serve as their holding firm.
The company will raise the battery business’ expansion from internal resources and debt, it said in its press statement.
This year, there is an exponential rise in the demand for electric vehicles, thanks to the governments’ incentives to buy them. A report by SNE Research suggests that the global electric vehicle batters have more than doubled in the first half, led by manufacturers in China.
SK Innovation said it has an order book of 1,000 GWh for EV batteries, worth about 130 trillion won.