South Korean energy and petrochemicals company SK Innovation has announced plans to ramp up its electric vehicle (EV) battery business, saying it will be spending 30 trillion won (RM110 billion) over the next five years to multiply production capacity by five times in order to capture surging global demand.

While the company’s oil refining and distribution business was its biggest earner last year, generating more than 60% of total sales, it is looking at its EV battery operations as a growth driver, Nikkei Asia reports. The battery division contributed just 5% of the company’s 34 trillion won (RM124.8 billion) in revenue last year, but earnings are expected to grow significantly.

The company, currently the world’s sixth-largest battery producer, has landed long-term supply contracts with the likes of Hyundai, Volkswagen and Ford, and said it already has orders worth 130 billion won (RM477 million) on its books. It is building five new factories in the US, Europe and China, and is targeting production capacity of 200 gigawatt-hours by 2025, up from the 40 GWh it is producing at present.

Plans are afoot to spin off the battery unit and take it public to raise funds for the expansion of the business. Ji Dong-seop, the head of SK Innovation’s battery business, said this would be done as quickly as possible so that the company doesn’t miss out on the opportunity.

SK Innovation held just a 5.2% share of the global EV battery market in 2020, research data showed, but Ji said the company is aiming to rise to the world’s top three by late 2022. The field is currently led by China’s Contemporary Amperex Technology (CATL), along with South Korea’s LG Chem and Japan’s Panasonic.