SEOUL -- SK Innovation will spend 30 trillion won ($26.5 billion) on its electric vehicle battery business over the next five years, the South Korean energy and materials company said Thursday, looking to multiply production capacity by a factor of five to capture surging global demand.
The world's sixth-largest battery producer reports already having orders worth 130 billion won on its books.
"We are transitioning from carbon to green, and we will transform into an energy and materials company that is good for the environment," CEO and President Kim Jun said during a business strategy briefing in Seoul.
SK Innovation's EV battery operations accounted for just 5% of the company's 34 trillion won in revenue last year. The oil refining and distribution business generated more than 60% of sales, while petrochemicals contributed over 20%.
Yet the South Korean company positions batteries as a growth driver. It landed long-term supply contracts with the Hyundai Motor group, Volkswagen, Ford Motor and other big-name automakers.
SK Innovation is building five new factories in the U.S., Europe and China. The company targets production capacity of 200 gigawatt-hours by 2025, up from 40 GWh at present.
The supplier envisions spinning off the battery unit and taking it public to raise funds for the expansion.
"We should quickly carry out the spinoff so that we don't miss out on the best time to invest," said Ji Dong-seop, the head of SK Innovation's battery business.
SK Innovation held just a 5.2% share of the global EV battery market in 2020, Tokyo analytics firm Techno Systems Research says. The field is led by China's Contemporary Amperex Technology Ltd. (CATL), along with South Korea's LG Chem and Panasonic of Japan.
"We will rise to the world's top three by late 2022," Ji said.