SK may develop LFP batteries for low-priced EVs

SK On, the recently-launched battery company of South Korea's SK Group, is considering manufacturing lithium iron phosphate (LFP) batteries to supply to low- to medium-priced electric vehicles, according to its executives.

Vehicle makers are highly interested in LFP cells, which are made up of lithium, iron and phosphate, SK Innovation Co. Chief Executive Kim Jun and SK On CEO Jee Dong-seob were quoted as saying in an interview with Reuters on Monday.

LFP batteries use iron, instead of cobalt and are 20-30% cheaper than the NCM batteries composed of lithium, nickel, cobalt and manganese (NCM). Because of low energy density, or shorter battery run time, the LFP type is mainly produced by Chinese companies, including Contemporary Amperex Technology Co. (CATL) and BYD.

But a series of recent fires in EVs powered by NCM batteries undermined their product reliability and spurred interest in LFP cells, amid expectations that demand for low-priced, small-size EVs will pick up.

Kim expects that EV battery shortages in the US will continue until 2025 because of the long lead times to build production facilities. In comparison, China will have a battery oversupply, while Europe stays in balance between supply and demand.

"The current US battery capacity is far short of meeting demand. Building a factory to meet demand requires a lead time of 30 months, and I see a battery shortage continuing at least until 2025," Kim told Reuters.

SK Innovation and Ford Co. last week said that they would double investments to a combined $11.4 billion to build an assembly and battery complex and two additional battery factories in the US. Under the plan, SK will be able to produce 150 gigawatt-hours (GWh) annually in the US alone.

Meanwhile, its hometown competitors LG Energy Solution and Samsung SDI Co. have focused on developing batteries composed of nickel, cobalt, manganese and aluminum (NCMA) and solid-state batteries, rather than diversifying into the low-priced LFP battery market.

Further, battery manufacturers and automakers strive to develop a next-generation EV battery, called an all-solid-state battery (ASSB), which enables longer mileage and a shorter charging time than current EV batteries due to its higher energy density.

Write to Hyung-kyu Kim at khk@hankyung.com
Yeonhee Kim edited this article.