Ford Motor Co F and Volkswagen AG’s VWAGY battery supplier SK Innovation Co said on Wednesday it is splitting the battery business amid rising global demand for electric vehicles.
What Happened: SK Innovation plans to form a separate unit named SK Battery later this year after seeking approval from shareholders on Sept.16, the company said in a statement.
The South Korean conglomerate also plans to separate its oil exploration and production operations into a new unit, following which both companies will become wholly-owned subsidiaries.
The company, which rivals LG Chem — the battery supplier of Tesla Inc’s TSLA and Nio Inc. NIO — said it plans to lift battery capacity to 200 gigawatt-hours by 2025 from about 40 GWh currently and also aims to produce 500 GWh by the end of the decade.
See Also: Ford Set To Announce EV Battery Joint Venture With SK Innovation Thursday: Report
Why It Matters: SK Innovation is investing billions of dollars through 2025 to reach net-zero emissions in all of its operations before 2050. The company last month said it has an order book of 1,000 GWh for EV batteries, worth about $100 billion.
SK Innovation’s CEO had in July said the company could also consider an initial public offering of the battery business including the possibility of listing the unit on New York’s Nasdaq exchange.
Price Action: Ford shares closed 0.79% higher at $14.02 on Tuesday. SK Innovation shares about 4% in early Seoul trading.
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