SK Innovation plans new battery plant
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December 10, 2018 12:00 AM

$1.7B battery plant in Georgia won't be enough to meet industry's needs

Stephanie Hernandez McGavin
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    With demand for lithium ion batteries expected to skyrocket, SK Innovation Co. has opened a factory in Hungary, shown, and plans to begin construction next year on a plant in Georgia.

    Future demand for electrified vehicle batteries has led to a $1.67 billion factory project in north Georgia.

    South Korean lithium ion battery producer SK Innovation Co. is not revealing who its customers will be. But SK will begin construction early next year on the plant in Commerce, Ga., about an hour northeast of Atlanta, with plans to employ 2,000 workers producing an annual volume of lithium ion batteries equal to 9.8 gigawatt-hours by 2022.

    For the subsidiary of SK Group of Seoul, that volume — expressed in energy storage terms rather than units of production — will substantially increase its electrified vehicle battery output.

    But it is still a drop in the bucket compared with the industry's projected need. That unmet need is a big new potential opportunity for states and communities trying to recruit the auto industry.

    Andrew Fulbrook, IHS Markit executive director of light-vehicle powertrain research and analysis, said battery production forecasts continue to swell.

    Last year, IHS estimated that the global industry will require battery production capacity equal to 305 gigawatt-hours of power storage in 2025 to supply the number of electrified vehicles automakers want to build. That battery forecast was eight times the current global capacity.

    But Fulbrook says that forecast has risen sharply this year alone.

    "Our latest expectation is that global capacity for automotive traction batteries will need to rise to over 550 gigawatt-hours in 2025 in order to satisfy our latest demand projections," he said.

    But the sector's future is not yet in focus. Which battery producer will supply which automaker is far from clear. And the map that will guide future investment is not yet drawn.

    Still, the industry believes battery plants will need to be near the assembly lines that will build the electrified vehicles.

    "When you talk about batteries going into electric vehicles and hybrids, this is the future. And SK Innovation has been around a long time. They are well-established, even though some of those vehicles are very new to us." Tom Croteau, Georgia Department of Economic Development

    For that reason, Georgia's location amid auto factories in the Southeast was a key factor in SK Innovation's site decision, said Tom Croteau, deputy commissioner of the Georgia Department of Economic Development. The Commerce location also gives SK space to expand, he said.

    Croteau maintains that electric and hybrid vehicles are the future and SK Innovation will be part of it.

    "The auto industry is a key target for Georgia, so anything related to automotive manufacturing is of interest to us," Croteau said.

    "When you talk about batteries going into electric vehicles and hybrids, this is the future. And SK Innovation has been around a long time. They are well-established, even though some of these vehicles are very new to us."

    Jun Kim: Boosts U.S. presence

    SK Innovation does not have any U.S. customers, but globally it supplies Mercedes-Benz, Hyundai and Kia. Hyundai and Mercedes have manufacturing plants nearby in Alabama, as does Honda. A Mazda-Toyota venture has broken ground on a factory in Alabama, and Kia has a plant in Georgia. Also near the SK site is Volkswagen's plant in Chattanooga.

    "We are excited to bolster our presence in the United States by making this investment in Georgia," SK Innovation CEO Jun Kim said in a statement. "SK Innovation is a worldwide leader in the energy industry and this latest investment will allow us to work with the growing automotive industry in the Southeastern United States, ensuring future partnerships for years to come."

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