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SK On Nears Strategic Alliance with Nissan for EV Battery Production in the US

The potential partnership aims to bolster Nissan's US EV presence, aligning with SK On's expansion strategy and tapping into US subsidy opportunities
South Korea
s 096770.KO Mid and Small Cap 2000
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SK On, South Korea’s prominent rechargeable battery manufacturer, is reportedly in advanced discussions with Nissan Motor Co. to co-produce battery cells for the automaker’s electric vehicles (EVs) in the United States. This collaboration, as noted by the Yomiuri Shimbun, could see the establishment of a new EV battery facility in the US, specifically tailored to support Nissan’s local manufacturing needs.

The talks, focusing on the intricacies of this joint venture, are poised to conclude in the upcoming months, with Nissan planning to incorporate this partnership into its forthcoming three-year strategic blueprint. The timeline suggested points towards SK On commencing battery supply to Nissan’s US operations around 2026 or 2027, a schedule that aligns with Nissan’s EV rollout plan.

This alliance could be a game-changer for Nissan, enabling its US-produced EVs to qualify for federal subsidies under the stipulations of the 2022 US Inflation Reduction Act. This is a critical pivot from Nissan’s current battery sourcing from Envision AESC, a China-based entity, which presently positions Nissan’s EVs outside the ambit of these subsidies.

Nissan’s strategic move to partner with SK On reflects a broader ambition to enhance its competitive edge in the rapidly evolving EV market, where it currently lags behind industry leaders, particularly in the US sector. This is underscored by Nissan’s 2023 US EV sales figures, which starkly contrast with those of Hyundai Motor Co. and Kia Corp.

The potential collaboration is also seen as a significant stride for SK On in reinforcing its global footprint. The company has ambitious plans in the US, including a $11.4 billion investment to establish three battery plants in collaboration with Ford Motor Co. and a separate joint venture with Hyundai Motor in Georgia. Amidst these expansive projects, SK On is actively mobilizing financial resources, targeting up to 2 trillion won for upcoming constructions, and setting sights on profitability and a prospective IPO in 2026.

This partnership not only underscores the accelerating shift towards electric mobility but also highlights the strategic realignments within the auto industry to adapt to new market dynamics and regulatory landscapes, particularly in the United States.

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