SK On Expands EV and ESS Battery Plant in Georgia, United States

According to foreign media reports, amid the tightening of import restrictions on Chinese batteries in the United States, South Korean battery manufacturer SK On is expanding its factory in Georgia to become a comprehensive production base in the U.S. with capabilities for both electric vehicle batteries and energy storage system (ESS) batteries, in order to strengthen its market position.

Image source: SK On

In September of this year, SK On signed its first large-scale energy storage system battery order in the United States with Flatiron Energy Development, a renewable energy developer based in Colorado. The order is valued at approximately 2 trillion won (about $1.4 billion) and involves 7.2 GWh of cost-effective lithium iron phosphate (LFP) batteries. To fulfill this four-year contract that takes effect next year, SK On plans to convert part of the nickel-cobalt-manganese (NCM) electric vehicle battery production line at its SK Battery America plant in Georgia into an LFP battery production line, with mass production expected to begin in the second half of 2026.

After this collaboration, SK Battery America will upgrade to a "dual-chemistry" production base capable of simultaneously producing NCM and LFP batteries, allowing SK On to respond more flexibly to changes in market demand in the fields of electric vehicles and energy storage systems in the United States.

By increasing its LFP battery production capacity, SK On will become one of only two companies in North America, along with Korean battery manufacturer LG Energy Solution, that can independently operate and produce both NCM and LFP batteries. Additionally, it has been reported that Samsung SDI, which has yet to establish its own factory in the United States, is considering converting part of its joint venture production line with Stellantis into a production line for LFP batteries used in energy storage systems.

Industry insiders state that SK On's "dual-track strategy" is highly aligned with the demands of the U.S. market: in the electric vehicle sector, there is still strong demand for NCM batteries with high energy density and long range; while in the energy storage system sector, LFP batteries are increasingly favored due to their cost advantages and safety.

According to data from the International Energy Agency (IEA), in 2023, high-nickel NCM batteries accounted for 90% of the installed capacity of electric vehicle batteries in the United States, and this proportion further increased to 92% this year. Market research firm Mordor Intelligence also pointed out that mainstream automakers prefer to choose NCM batteries to balance range and safety. In April this year, Eric Kuyper, the Chief Technology Officer of American electric vehicle manufacturer Slate, which signed a supply agreement with SK On, explained that due to the limited space under the vehicle chassis, "to achieve long range, currently only NCM batteries are feasible."

In contrast, LFP batteries are rapidly capturing the U.S. energy storage system battery market, which was once dominated by China. However, the increasing tariffs in the U.S. (currently at 40.9% and expected to rise to 58.4% next year) are eroding the cost advantage of Chinese competitors. Reports indicate that the price of Chinese LFP batteries is expected to rise from $73 per kilowatt-hour in 2023 to about $87 this year, approaching the price range of Korean companies' U.S.-made batteries, which is between $85 and $90 per kilowatt-hour.

A knowledgeable source stated, "By enriching its product matrix, SK On is building a more solid foundation for growth in the U.S. market. Given the U.S. government's tightening restrictions on Chinese batteries, the ability to simultaneously produce NCM and LFP batteries domestically has significant strategic importance."