Polestar signs battery deal with SK On

Deal could presage US manufacturing of new GT sedan to capitalise on IRA discounts

Polestar signs battery deal with SK On
The Polestar 5 is still at development stage

Swedish EV maker Polestar has announced a deal with South Korean battery firm SK On to supply batteries for the automaker’s upcoming Polestar 5 EV.

The Polestar 5 is a planned four-door GT car, production of which is expected to begin in 2025, and Polestar says that battery range is therefore a high priority for its “performance” EVs.

“SK On was chosen by Polestar due to its superior battery cell technology that offers high-performing chemistry, fast charging, efficient discharging and superior driving range,” the automaker says, adding that “the high-nickel battery cell modules comprise ultra-long 56cm cells with high energy density”.

“Our relationship with SK On has been fruitful following our initial memorandum of understanding and their investment in our brand. Polestar 5 is developing at pace and will feature this high-capacity battery to provide the performance expected of our grand tourer,” says Polestar CEO Thomas Ingenlath.

While the Polestar 5 has not yet entered production, the company’s current offerings are the Polestar 2 sedan, which sells at a minimum of $50,000, and the Polestar 3 e-SUV, which starts at $80,000.

The company says its current EVs use a 69kWh battery supplied by South Korean battery firm LG Chem, while long-range versions use an 82kWh LFP battery from Chinese industry leader Catl.

South Korea has a free trade agreement with the US, so Polestar look set to leverage Korean-made batteries to qualify its EVs for $7,500 tax credit savings for its US customers under the Inflation Reduction Act. However, this will apply only if the company opts to build the vehicle in its North Carolina plant, which is slated to begin production in 2024.

At present, the company manufacturers its EVs in China, home of Geely, which, together with its Swedish subsidiary Volvo Cars, owns a controlling stake in Polestar.

Polestar stock is trading at $0.30/share and is down 26.8pc over the past month. This is despite reporting a record quarter in of 13,900 vehicle deliveries, an increase of 50pc year-on-year.

“With approximately 41,700 deliveries in the first nine months, a growth of 37pc year-on-year, and Polestar 4 deliveries commencing in China during the fourth quarter, Polestar still expects to deliver 60,000-70,000 vehicles in 2023,” the company says.

SK On is an existing partner of OEMs making EVs in the US, including a battery joint venture with Detroit Three automaker Ford called Blue Oval SK. However, at the manufacturer’s third quarter results, CEO Jim Farley announced that Ford was “making a decision with SK On to delay the second Blue Oval SK JV battery plant in Kentucky.”

In contrast, SK On recently announced “an expansion of profits across all business areas” at its third quarter results, with its battery business reporting sales of KRW 3.17tn ($2.45bn), with an all-time low operating loss of KRW 86.1bn.

Its battery business’ “performance was bolstered by the increased production of plants in the US and sales expansion, combined with the benefits generated from the advanced manufacturing production credit, which amounted to KRW 209.9 billion ($161.9mn)”, the company says.

SK On calls the agreement with Polestar a “another long-term growth engine in the global battery market”.

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