Electric Vehicle Revolution: SK On Secures Lucrative Deal with Nissan
In a significant move, South Korean electric vehicle (EV) battery manufacturer SK On Company Ltd has inked a deal to supply batteries to Nissan Motor Company’s vehicle assembly plants in the US. This partnership is expected to be worth a staggering US$1.8 billion and will provide 20 gigawatt hours (GWh) of batteries, enough to power 300,000 battery electric vehicles (BEVs).
A Shift in the EV Landscape
Currently, Nissan’s BEVs are powered by batteries made by China-based Envision AESC, which makes them ineligible for US subsidies under the Inflation Reduction Act (IRA) introduced by the Biden administration in 2022. This deal marks a significant shift in the EV landscape, as SK On expands its presence in the US market.
Aggressive Expansion
Loss-making SK On has been aggressively expanding in the US over the past few years, establishing an early presence in the region’s EV battery market. The company operates a battery plant in Georgia and is building additional capacity to supply the local operations of Ford and Hyundai. Furthermore, SK On is constructing new capacity in South Korea, Europe, and China.
Challenges and Opportunities
Despite facing challenges due to lower-than-expected growth in BEV demand in key global markets, SK On remains committed to its expansion plans. The recent election of Donald Trump as the US president has cast doubt on the segment’s medium-term growth potential in the US. However, this deal with Nissan provides a much-needed boost to SK On’s prospects.
A Long-Term Partnership
SK On has been in negotiations with Nissan since early last year, including the possibility of setting up a joint venture. Although Nissan appears to have delayed plans to ramp up BEV production in the US due to slower-than-expected growth, SK On has agreed to begin supplying batteries to Nissan from 2028.
Merger Implications
Nissan is currently in merger negotiations with Honda Motor, which is expected to result in BEV platform sharing between the two automakers if the merger is completed as planned in 2026. Honda has a separate joint venture agreement with South Korean battery manufacturer LG Energy Solution to produce EV batteries in the US. This deal could have significant implications for the EV industry as a whole.
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