To compete with the Chinese giants on their own territory.
CES 2023 has become a platform for manufacturers of not only electronics, but also electric vehicles, as well as component suppliers for them. The South Korean company SK On, according to Reuters, through the mouth of its executive vice president Jason Lee (Jason Lee), promised that by 2025 it will launch its own version of the LFP-type traction batteries, which will be cheaper than the nickel-based lithium batteries currently offered.
In fact, it was the specialization in the production of lithium iron phosphate (LFP) batteries and the high demand for them from local electric vehicle manufacturers that allowed the Chinese company CATL to become the largest supplier of traction batteries in a few years and occupy about a third of the world market. The Korean competitor understands that the cost of producing batteries is highly dependent on the location of the enterprise. According to an SK On representative, Chinese-made LFP batteries offer a 20% lower price compared to NCM batteries, but if the same batteries are produced in Europe, they will cost only 15% less. Releasing them in the US is generally not advisable if the task is to offer a lower price.
Image Source: Ford Motor
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For the above reasons, SK On will start producing its LFP batteries in China in 2025. They will act as a more affordable alternative to the nickel, cobalt and manganese batteries that the company is currently offering. LFP-type batteries are cheaper to manufacture, but they have less energy storage density, and they also lose charge more in the cold. But they are safer in terms of ignition and have a higher operational resource.