South Korea’s SK On to Start Producing Lower Cost LFP Batteries by 2025

South Korean battery maker SK On is planning to produce new, lower cost lithium-iron-phosphate (LFP) batteries for electric vehicles (EVs) by 2025 as part of an effort to ease automakers’ headaches from rising EV costs. Several automakers have announced plans to offer LFP battery models last year. Ford said it was planning to supply LFP batteries from China’s CATL. Tesla and Rivian also announced plans to use LFP batteries.

LFP battery production is currently dominated by Chinese battery manufacturers, thanks to a strong demand from domestic automakers. LFP batteries can be produced at lower cost, but deliver less range than nickel-cobalt EV batteries.

SK On said the cost advantage from lithium-iron chemistry depends on where the batteries are made If made in China, it brings 20% cost advantage over nickel cobalt batteries. It can cost 15% less if produced in Europe. The company says it loses cost advantage when produced in the United States.

SK On plans to source its LFP batteries initially from China.

SK On is investing in new U.S. battery plants and by 2026 expects to have 150GWh of capacity. SK On hopes its customers to meet domestic content requirements of the U.S. EV tax credit rule when its U.S. cathode production kicks off.

Despite some industry concerns over aggressive global expansion of battery makers and automakers creating oversupply, SK On says new plants are being built with guarantees from automakers that they will buy the batteries.

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