SK Innovation's electric vehicle battery subsidiary 'SK On' and its lubricants and immersion cooling subsidiary 'SK Enmove' will merge. The merger of the two companies allows SK Innovation to secure resources for improving its financial structure and continuing its battery business.
Additionally, SK Innovation plans to raise 8 trillion won through a third-party capital increase and purchase all of SK On's convertible preferred shares held by financial investors (FI). This indicates a commitment not to engage in excessive duplicate listings. Furthermore, it will focus on asset efficiencies worth 1.5 trillion won.
In particular, starting next year, new 'low-cost electric vehicles' that automobile manufacturers mainly sell will be released successively, aiming to officially escape from the 'chasm (temporary demand stagnation).'
◇ SK On-Enmove merger, financial structure improvement... battery + immersion cooling package
On the 30th, SK Innovation, SK On (electric vehicle battery), and SK Enmove (lubricants, immersion cooling) held board meetings to approve the merger proposal. SK On will absorb SK Enmove, and the merged entity is set to officially launch on November 1.
As a result of this merger, SK On has secured the capability to withstand new vehicle launches and initial public offerings (IPOs). SK On has experienced immediate financial structural improvements, with its capital increasing to 1.7 trillion won and earnings before interest, taxes, depreciation, and amortization (EBITDA) of around 800 billion won.
SK Innovation has faced a deteriorating financial structure due to continued investments in SK On at the trillion-won level. The company's debt ratio surged from 176% in the first quarter of last year to 207% (approximately 75 trillion won) in the first quarter of this year. SK On's debt ratio reached 251% in the last first quarter.
Additionally, alongside unstable oil prices and supply excess from China, SK Innovation's core businesses in refining and chemicals have also faced downturns. Consequently, Moody's downgraded SK Innovation's credit rating from 'investment grade (Baa3)' to 'non-investment grade (Ba1)' in March.
SK Innovation aims to generate over 200 billion won in additional EBITDA by 2030 through synergies from the merger of SK On and Enmove. For example, it intends to ensure battery stability and enhance profitability by incorporating Enmove's immersion cooling technology into electric vehicles powered by SK On batteries. The immersion cooling technology will also be applied to energy storage solutions (ESS) batteries used in data centers.
◇ Hyundai Motor and Kia leading the charge, pushing new electric vehicles... overcoming the fundamental chasm
The industry believes that LG Energy Solution's supply of 6 trillion won worth of LFP batteries for Tesla and Samsung Electronics' semiconductor orders for Tesla's autonomous driving systems are solidifying the bottom of the chasm.
In fact, the global electric vehicle sales from the beginning of this year until May increased by 35% compared to last year. According to a report by the Korea Automobile & Mobility Association (KAMA) on the global electric vehicle market, the sales of battery electric vehicles (BEV) from January to May reached 5.02 million units, a 34.5% increase compared to the previous year, accounting for 13.7% of the total new car market.
While absolute sales of battery electric vehicles have increased recently, the growth rate itself has been on a downward trend. The growth rate of battery electric vehicle sales, which surged by 110.9% compared to the previous year in 2021, decreased to 63.9% in 2022, 25.6% in 2023, and 12% last year.
However, the growth rate from January to May is 34.5%, which has raised market responses suggesting that it might have found a bottom.
Hyundai Motor and Kia sold a total of 893,152 units in the U.S. market in the first half of 2025, marking a 9.2% increase compared to the same period last year. Accordingly, SK On's U.S. subsidiary, SK Battery America (SKBA), produces batteries for Hyundai and Kia electric vehicles in 9 out of its 12 production lines at its Georgia plants.
Hyundai and Kia's U.S. electric vehicle-specific plant, 'Metaplant America (HMGMA),' began pilot production of the Ioniq 5 in October last year and is preparing for mass production next month. HMGMA plans to produce up to 300,000 electric vehicles annually, and with SK On's line conversion, batteries can now be supplied locally on demand.
SK On can supply approximately 16.5 GWh of batteries annually from its Georgia plant, enough for about 200,000 electric vehicles. The produced batteries can be delivered to HMGMA within 4 hours via land transportation, significantly reducing transportation time and logistics costs compared to bringing batteries made in Korea and European plants to the U.S.
Additionally, the launch of affordable new models by global automakers is highly anticipated. Volkswagen's 'ID.2,' a low-cost electric car model under development costing around 30 million won, is likely to be equipped with SK On batteries. This vehicle aims to be released by the end of 2025.
It is also positive that the Volkswagen ID.4, equipped with SK On batteries, is gaining popularity. The industry forecasts that ID.4's sales in the U.S. will reach approximately 60,000 units, double the previous year's figures.
Ford is also working on developing an affordable electric vehicle aimed for release by the end of next year or by 2027. Meanwhile, Polestar, Tesla's competitor, is expected to launch its new model, Polestar 5, next year. Nissan has chosen SK On batteries for its next-generation electric vehicles intended for the North American market.