SK Innovation invests nearly $1.2 billion to build a third battery factory in Hungary

According to reports, South Korean company SK Innovation announced on January 29th that it will invest 1.3 trillion won (about US $1.16 billion) to build its third battery factory in Hungary.

SK Innovation, which supplies batteries to carmakers such as Volkswagen, Ford and Hyundai, said construction of the new battery plant would begin in the third quarter of this year and would have an annual capacity of 30 GWh. By contrast, the company's first battery plant in Hungary has an annual capacity of 7.5 GWh, which began commercial production in the first quarter of last year.

SK Innovation said its third Hungarian plant would be a long-term project, with a total investment of 2.6 trillion won by 2028. The company also plans to raise more money through external financing if necessary.

, SK Innovation said in a regulatory filing earlier on January 29th that it planned to start commercial production at its third battery plant in Hungary in early 2024.

Hungary has a clear advantage in becoming a battery production centre because there are several car production plants near the country. But, SK Innovation chose to build a new battery factory here for another reason: government subsidies. "Hungary plans to provide the largest investment subsidy in history, and once an agreement is signed with the SK Innovation and the EU declaration process is completed, the government will disclose the scale of its aid," the report said.

SK Innovation's investment comes at a time when global carmakers are transitioning to electric vehicles to comply with environmental regulations, so demand for electric vehicle batteries is on the rise.

SK Innovation currently has an annual global capacity of about 40 GWh, and aims to increase capacity to about 125 GWh by 2025. In addition to Hungary, the company also operates battery production plants in the United States, China and South Korea.