By Abhirup Roy and Heekyong Yang
LAS VEGAS (Reuters) - South Korea's SK On plans to start mass producing lithium iron phosphate (LFP) batteries as early as 2026 to supply several automakers as it pushes to deliver a lower cost battery chemistry favoured by its Chinese rivals, a senior executive said.
The company is in talks with some major traditional automakers, or original equipment manufacturers (OEMs), that are looking to line up LFP battery supply deals, SK On's Chief Administrative Officer Choi Young-chan said.
Choi did not disclose the names of automakers but said the company plans to start mass producing LFP batteries once discussions are finalized.
"We developed it, and we are ready to produce it. We are having some dialogue with OEMs who will take our LFP," Choi told Reuters on the sidelines of the CES technology show in Las Vegas.
"Maybe if the dialogue is successful, we can make it in 2026 or 2027. We are flexible."
Automakers are expanding their use of different types of battery chemistry, such as LFP, in a bid to cut costs to make affordable EVs and avoid supply chain concerns around materials like cobalt.
This is the first time SK On has revealed details on its LFP battery strategy and timeline for beginning mass production.
Its South Korean rivals, LG Energy Solution and Samsung (KS:005930) SDI, have announced they are targeting mass production of their LFP products in 2026.
SK On is a battery unit of South Korean energy group SK Innovation, which supplies electric vehicle (EV) batteries to Ford (NYSE:F), Volkswagen (ETR:VOWG_p), and Hyundai (OTC:HYMTF) among others.
Choi said SK On is considering manufacturing LFP batteries in Europe or China.
"The biggest challenge is cost. We have to compete with the Chinese LFPs. Maybe it's not easy," he said.
"So, we are not focusing on the price itself. We are focusing on the energy density, the charging time, efficiency. So, we have to find out those kind of OEMs who need our competitiveness," said Choi.
SK On has production sites in the United States, South Korea, Hungary, and China.
Choi said the firm is not in talks with its U.S. automaker customers about LFP supply.
"When you build up the LFP factory plants in the United States, it costs too much ... when it comes to LFP, we do not look at the U.S. market at all. We are focusing on the European market," he said.
Chinese battery makers dominate world LFP production, supported by strong demand from automakers in its home market.
LFP batteries made by Chinese manufacturers like CATL and BYD (SZ:002594) are roughly 20% cheaper than nickel-based counterparts, but deliver less range than comparable nickel-based EV batteries.
While SK On is pushing for LFP battery production, the firm is also developing prismatic and cylindrical-type EV batteries.
SK On has seen much progress in developing cylindrical batteries used by Tesla (NASDAQ:TSLA) and others, SK On's Executive Vice Chairman Chey Jae-won said in a separate statement.