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SK On Seeks $1.5 Billion Funding to Fuel Global Battery Plant Expansion

Defying EV market slowdown, SK On plans massive investment in global battery production, targeting 500GWh capacity by 2030
South Korea
s 096770.KO Mid and Small Cap 2000
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In a bold move countering the broader electric vehicle (EV) market’s cautious stance, South Korea’s SK On Co. is on the hunt to raise up to 2 trillion won ($1.5 billion) for aggressive facility expansion. The world’s fifth-largest EV battery manufacturer is reaching out to global investment banks to orchestrate a significant fundraising round to bolster its production capabilities, particularly in the United States and China.

This fundraising effort marks a continuation of SK On’s expansive investment strategy, following a 2.25 trillion won equity boost last June, elevating its valuation to 25 trillion won. With projections suggesting a valuation increase to 30 trillion won, the fresh capital aims to support SK On’s ambitious plans to expand its manufacturing footprint across key global markets.

The company is currently developing three US plants with Ford Motor Co., in addition to a new partnership with Hyundai Motor Co. for a 35GWh facility in Georgia. This is part of SK On’s strategic initiative to escalate its production capacity from 88GWh in 2023 to over 220GWh by 2025, and a visionary 500GWh by 2030. This year alone, SK On plans to allocate 7.5 trillion won ($5.6 billion) towards enhancing its battery production facilities.

SK On’s investment spree contrasts sharply with the broader industry’s more cautious approach, as many carmakers slow down electrification efforts amid lukewarm demand. However, SK On is not just expanding its physical footprint; it’s also innovating, with plans to develop a large-size 4680 form factor battery, a format increasingly favored by major EV players, including Tesla.

The company’s recent shift to profitability in its EBITDA for the fourth quarter of last year has helped mitigate investor concerns over its financing capabilities, which had been shadowed by the declining share prices of industry peers LG Energy Solution and Samsung SDI.

Despite the potential slowdown in revenue growth projected for 2024, SK On’s consistent order intake and solid quarterly performances underscore its strategic positioning for long-term growth in the global EV battery market.

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