South Korean battery maker SK Innovation has signed on to supply Xpeng Motors with batteries containing 80% nickel, Korean media outlet ET News reported on Monday.
High nickel-based lithium-ion batteries have higher capacity and cost less to produce. The high energy density that nickel provides makes them the preferred battery for electric vehicles.
An industry insider told ET News that SK Innovation’s batteries for Xpeng will be produced at factories in Huizhou, Guangdong Province. The Huizhou plant is SK Innovation’s third battery plant in China. It has an annual capacity of 10 GWh.
The South Korean battery maker is planning to expand its presence in China by building a fourth factory in the country. The company said last week that it will invest USD 1.04 billion in a new production facility, but did not disclose further details.
SK Innovation has battery production sites in South Korea, China, the United States, and Hungary. Its clients include Volkswagen and Ford in the US, Daimler in Europe, and Hyundai Motor and Kia in Asia.
The agreement between Xpeng and SK Innovation suggests the EV maker is diversifying its suppliers for a key component as its order numbers ramp up.
Domestic battery manufacturer CATL was reportedly the sole supplier for Xpeng’s car batteries from 2020 until March 2021. The automaker then took on Eve Energy, another local battery manufacturer, as a secondary supplier. SK Innovation will be the automaker’s third source for power cells.
Xpeng’s new P7 sedan and G3 SUV that launched in March are equipped with Eve Energy’s lithium iron phosphate battery.
Xin Guobin, the vice minister of the Ministry of Industry and Information Technology said at a conference that the country will secure a supply of key raw materials—including lithium, cobalt, and nickel—to shore up domestic auto production capabilities. Since the beginning of 2021, the price of raw materials has skyrocketed and EV power cells are in short supply.
Deliveries of major Chinese EV brands, including Xpeng, dropped in August due to a shortage of semiconductors. The company delivered 7,214 vehicles in August, a drop from the 8,040 vehicles shipped in July.
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