Let's take a look at the financial results of SK Innovation, the South Korean conglomerate mostly focused on its Refining, Petrochem and Lubricants divisions, which is also one of the largest lithium-ion EV battery manufacturers.

The company is quickly expanding its production of battery cells (and battery materials), but according to the quarterly reports, it will need some time to make profits.

In the first quarter of 2021, the company increased sales, but noted a loss:

  • sales: 9,239.8 billion KRW ($8.30 billion), up 20% year-over-year
  • operating profits: 502.5 billion KRW ($450 million)
  • pre-tax income: -527.6 billion KRW (-$470 million)

The reason is the battery-related dispute settlement (with LG Chem's LG Energy Solution) announced in April.

"However, its pre-tax profit recorded a loss of KRW 527.6 billion. This is attributable to non-operating losses of KRW 1030.1 trillion, including exchange rate losses and l the battery-related dispute settlement."


Business performance - "Other"

The battery business, included in the category named "Other", remains only a small part of the entire company, but it's expanding. So far it's not yet profitable.

  • sales: 571.6 billion KRW ($510 million)
  • operating profits: -200.7 billion KRW (-$180 million)
  • pre-tax income: -1,160 billion KRW (-$1,040 million)

Battery business

In the first quarter of 2021, SK Innovation increased battery sales by about 80% year-over-year, however, it remains unprofitable. The operating margin is negative 34% and it's worse than in the previous two quarters.

The company explains that it's because of the initial cost of new overseas plants.

"Battery business recorded a sales of KRW 526.3 billion, up about 80% from the previous year (KRW 288.8 billion), due to a rise in sales volume. Operating losses recorded KRW 176.7 billion, up KRW 67.8 billion from the previous quarter, due to the rise in the initial cost of overseas plants."

  • sales: 526.3 billion KRW ($470 million); up about 80% year-over-year
  • operating profits: -176.7 billion KRW (-$160 million)
  • operating margin: -34%

SK Innovation is investing heavily in the new battery plants - in Europe, China and the U.S. The company intends to increase its annual battery cell output from about 40 GWh this year, to:

"Along with the Plant 1 in Hungary and the Changzhou plant in China, which began mass production in 2020, other SK Innovation’s EV battery plants that are under construction include Plant 2 in Hungary, and Plant 1, Plant 2 in Georgia, the U.S. A significant rise in earnings is expected as the Yancheng and Huizhou plants in China began mass production in the first quarter of this year and thereby sales will increase.

With the rapid growth of electric vehicles, SK Innovation plans to make aggressive investments in battery business, aiming to reach an annually total production capacity of over 85GWh by 2023, and over 125GWh by 2025."

As we can see on the map, the main expansion to be in the U.S. (22 GWh under construction and 60 GWh announced), which shows how painful the ban would've been without the settlement with LG Chem's LG Energy Solution).


Updated list of SK Innovation battery projects

South Korea

  • 4.7 GWh plant in Seosan, South Chungcheong Province, South Korea

Europe - Hungary:


  • 7.5 GWh battery plant in Changzhou, China (completed in December 2019, online since Q2 2020)
  • 20 GWh battery plant (plan) in Yancheng, China (online since Q1 2021)
  • battery plant in Huizhou, China (online since Q1 2021)


Battery material

SK Innovation is also producing EV battery materials - lithium-ion battery separators (LiBS). It's a small but very profitable part of the business:

  • sales: 93.3 billion KRW ($84 million)
  • operating profits: 31.7 billion KRW ($28 million)
  • operating margin: 34%
  • pre-tax income: 35.1 billion KRW ($32 million)

"The material business recorded an operating profit of KRW 31.7 billion, up KRW 6.4 billion from the previous quarter, due to cost reductions from increased productivity in the lithium-ion battery separator (LiBS) China plant and a decline in raw material costs."


SK Innovation produces LiBS in South Korea, and since 2020 also in China. The biggest plant is currently under construction in Poland:

"The material business is continuously pushing the expansion of lithium-ion battery separator (LiBS) facilities. The company’s LiBS production capacity is expected to increase from 860 million m2 per year as of last year’s end to 1.36 billion m2 by the end of this year. In the second quarter of this year, additional expansion of the plant in China will be completed, and mass production of the new line will follow. Besides, mass production at the plant in Poland will begin in the third quarter.

As more overseas plants start operating in sequence, the company’s production capacity of LiBS is expected to increase to a total of 2.73 billion m2 by 2024, including 520 million m2 in Korea, 670 million m2 in China, and 1.54 billion m2 in Poland."

Got a tip for us? Email: tips@insideevs.com