Strategic Alliances of SK Innovation and Samsung SDI (International Business Report on EV Battery Market)

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1. SK Innovation, SK On, and Ford

SK-on, a subsidiary of SK Innovation, was newly established in 2021 after the secondary battery business was separated. Ford is the second-largest car manufacturer in the U.S. By 2030, the company objects to convert all of its products into electric vehicles, which has led to increased battery demand. In 2019, as LG Ensol and GM established a JV, the cooperative relationship between automobile and battery companies became a major variable for competitiveness. In addition to this, the interests of Sk-on and Ford matched each other, resulting in their JV. In July 2022, Sk-On and Ford officially announced the establishment of 'BlueOval sk' In addition, Sk-On, Ford, and Koc established the MOU of a battery joint factory in Ankara, Türkiye. SkOn became the first to establish a JV in Europe. The plant will produce NCM batteries and start commercial production on an annual scale of 30 to 45 GWh in 2025. Further, in July 2022, Sk-On and Ford signed a LOI with EcoProBM to build a cathode material production facility in North America. Produced cathode here will be supplied to BlueOval sk. It wil build a solid supply chain from materials to parts and finished products.
2. Samsung SDI and Stellantis

Samsung SDI is an electronics affiliate of Samsung Group, established in 1970. It has been producing display products, but it also entered the lithium-ion secondary battery business in 2000. Based on financial statements, it recorded the highest performance ever this year as it proved profitability and safety for the EV battery business. Samsung SDI also launched a premium battery brand "PRiMX", focusing on customized prismatic and cylindrical batteries except for pouch types. Stellantis is the world's fourth-largest carmaker, launched last year by the merger of FCA and PSA Group, and has 14 automobile brands under its wing. In 2021, Samsung SDI and Stellantis announced that they have executed binding, definitive agreements to establish an EV battery facility in Kokomo, Indiana, U.S. The new facility will supply battery modules for a range of vehicles produced at Stellantis' North American assembly plants. Samsung SDI will be applying its cutting-edge technology PRiMX.
3. Strategies in Common

The JV of SK On and Samsung SDI has a common ground that the JV is between Korean battery manufacturers and global automakers especially for North America. Global automakers have increased their production in the U.S. as the revised U.S.-Mexico-Canada trade Agreement rules replace the NAFTA rules. The revised USMCA requires that 75% of core parts of a vehicle must be produced within the USMCA member countries, which was 60% before. As the batteries tend to account for 40% of the total costs of EV, most auto manufacturers are incentivized to manufacture batteries in North America. The Li-ion battery has a separator that keeps the cathode and anode part, which is composed of liquid electrolyte solution. However, the solid-state battery uses a solid one that shows improved stability and safety as the separator maintains the form even if the electrolyte is damaged. As the Li-ion battery has a risk of battery damage such as fire by explosion, electrolyte solution leakage, both companies have a need to improve batteries for safety.
4. Differences in Strategy

There are differences in strategy between Samsung SDI and SK On. Samsung SDI is more focused on investing in technology for next-generation batteries. Its research and development costs are the highest among Korean battery companies. In the first half of 2022, it focused on securing technology by spending about 370 million U.S. dollars, about 5.9% of its sales. The company opened a new R&D center in the U.S. and Europe this year and is focusing more on securing new technologies for next-generation EVs. SK On is actively expanding its production capacity which also leads to market share, relatively less than focusing on R&D compared to Samsung SDI. SK On plans to operate four new plants in the U.S. This strategy seems to work well. Unlike competitors such as LG ES and Samsung SDI, SK-On has increased its market share of global electric vehicle batteries.
5. Recommendations

Today, global automakers are establishing JVs to provide stable EV batteries, but ultimately aim to internalize them. In fact, discord between automakers and battery joint ventures is also being detected. Thus JV may be vulnerable to technology sharing, battery manufacturers must maintain technological gaps through continuous R&D, such as developing all-solid-state batteries, and strengthening battery efficiency and safety. Meanwhile, it is necessary to diversify the material supply chain in order to supply stable batteries amid stricter standards. Considering regional risks and supply and demand situations, supply chain risks should be reduced by minimizing resource dependence of specific companies or regions. In addition, it is necessary to strengthen their competitiveness by meeting ESG standards required by the market such as by expanding the use of eco-friendly materials, carbon neutrality, and securing battery reuse technologies.

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1. SK Innovation, SK On, and Ford

SK Innovation and its subsidiary SK On have formed a strategic partnership with Ford to develop and manufacture electric vehicle batteries. This collaboration is a significant move in the rapidly evolving electric vehicle (EV) market, as it brings together a leading South Korean battery manufacturer and a major American automaker. The partnership aims to leverage the strengths of each company to accelerate the adoption of EVs and meet the growing demand for sustainable transportation solutions. SK On's expertise in battery technology and manufacturing, combined with Ford's automotive engineering and market presence, could result in the development of high-performance, cost-effective EV batteries that cater to the needs of Ford's customers. This collaboration also highlights the global nature of the EV industry, where companies are forming strategic alliances to pool resources, share knowledge, and gain a competitive edge in the rapidly changing market landscape. The success of this partnership will be closely watched by the industry, as it could serve as a model for future collaborations between battery manufacturers and automakers in the pursuit of a more sustainable automotive future.
2. Samsung SDI and Stellantis

The partnership between Samsung SDI, a leading South Korean battery manufacturer, and Stellantis, the multinational automotive conglomerate formed by the merger of Fiat Chrysler Automobiles and Peugeot S.A., is another significant development in the EV battery supply chain. This collaboration aims to address the growing demand for EV batteries and support Stellantis' ambitious electrification plans. Samsung SDI's expertise in battery technology and manufacturing, combined with Stellantis' diverse portfolio of automotive brands, could result in the development of high-quality, cost-effective EV batteries that cater to the needs of a wide range of Stellantis' customers. The partnership also highlights the global nature of the EV industry, where companies are seeking to secure reliable and sustainable battery supplies to meet the increasing demand for EVs. The success of this collaboration will be crucial in determining Stellantis' ability to compete in the rapidly evolving EV market and maintain its position as a leading automotive group. The partnership between Samsung SDI and Stellantis is a testament to the importance of strategic alliances in the EV industry, where companies are leveraging their respective strengths to drive innovation and meet the changing needs of consumers.
3. Strategies in Common

The partnerships between SK Innovation/SK On and Ford, as well as Samsung SDI and Stellantis, share several common strategic elements. Firstly, both collaborations aim to leverage the expertise and capabilities of the battery manufacturers and the automakers to develop high-performance, cost-effective EV batteries that cater to the needs of their respective customers. This synergy between the battery technology and automotive engineering expertise is crucial in driving the adoption of EVs and meeting the growing demand for sustainable transportation solutions. Secondly, these partnerships highlight the global nature of the EV industry, where companies are forming strategic alliances to pool resources, share knowledge, and gain a competitive edge in the rapidly changing market landscape. By collaborating across national and corporate boundaries, these companies are able to access a wider range of technologies, resources, and market insights, which can ultimately benefit the end consumers. Lastly, both partnerships demonstrate the importance of securing reliable and sustainable battery supplies to support the automakers' electrification plans. As the EV market continues to grow, the ability to secure a steady and cost-effective supply of high-quality batteries will be a key competitive advantage for automakers.
4. Differences in Strategy

While the partnerships between SK Innovation/SK On and Ford, as well as Samsung SDI and Stellantis, share several common strategic elements, there are also some notable differences in their approaches. One key difference lies in the specific focus and target markets of the collaborations. The SK Innovation/SK On and Ford partnership seems to be more focused on the development and manufacturing of EV batteries, with the aim of supporting Ford's electrification plans and catering to the needs of its customers. In contrast, the Samsung SDI and Stellantis partnership appears to have a broader scope, encompassing not only battery technology but also the integration of these batteries across Stellantis' diverse portfolio of automotive brands. This difference in focus may reflect the unique strengths and market positions of the respective companies, as well as their strategic priorities in the EV market. Additionally, the geographic footprint of the collaborations may also differ, with the SK Innovation/SK On and Ford partnership potentially having a stronger focus on the North American market, while the Samsung SDI and Stellantis partnership may have a more global reach. These differences in strategy and market focus could lead to distinct competitive advantages and challenges for each partnership, ultimately shaping the long-term success and impact of these collaborations in the rapidly evolving EV industry.
5. Recommendations

Based on the analysis of the partnerships between SK Innovation/SK On and Ford, as well as Samsung SDI and Stellantis, I would recommend the following: 1. Continued focus on synergies and complementary strengths: The success of these partnerships will depend on the ability of the companies to leverage their respective strengths and expertise to develop innovative, cost-effective EV battery solutions. Maintaining a strong focus on synergies and complementary capabilities will be crucial in driving the adoption of EVs and meeting the evolving needs of consumers. 2. Adaptability and responsiveness to market changes: The EV market is rapidly evolving, with new technologies, regulations, and consumer preferences emerging constantly. The partnerships should be agile and responsive to these changes, continuously adapting their strategies and product offerings to stay ahead of the curve. 3. Expansion of geographic reach and diversification: While the current partnerships have a strong focus on specific regions or markets, there may be opportunities to expand the geographic reach and diversify the product portfolios to cater to a wider range of customers and markets. This could involve exploring new partnerships or strategic alliances in different regions or exploring the integration of battery technologies across a broader range of automotive brands. 4. Commitment to sustainability and environmental responsibility: As the EV industry grows, it will be increasingly important for these partnerships to prioritize sustainability and environmental responsibility in their operations and product development. This could involve initiatives such as the use of renewable energy sources, the implementation of circular economy principles, and the development of more sustainable battery recycling and disposal processes. 5. Continuous investment in research and development: Maintaining a strong focus on research and development will be crucial in driving innovation and staying ahead of the competition. The partnerships should allocate resources to explore new battery chemistries, improve energy density, and enhance the overall performance and cost-effectiveness of EV batteries. By addressing these recommendations, the partnerships between SK Innovation/SK On and Ford, as well as Samsung SDI and Stellantis, can strengthen their competitive positions, drive the adoption of EVs, and contribute to a more sustainable and environmentally responsible automotive industry.