LG new energy just said the company would suspend the construction of the Arizona factory energy storage system (ESS) battery production line.

On July 1, another South Korea battery giant SK On also issued emergency measures because of the cost of capital.

On July 1st, SK On said that as part of the cost-cutting measures, the company would freeze the annual salaries of all senior executives until the company turned losses into profits.

Chief Executive Officer of SK On said: "This is an emergency response formulated to cope with the 'changing business environment' and effectively manage the business."

since the split and independence of SK Group in October 2021, SK On has been facing great financial pressure. On the one hand, it is due to a large amount of investment brought by expansion of production and research and development, On the other hand, it is a slowdown in customer demand, some major customers cut orders, resulting in SK On facing many years of losses, and had to rely On the parent company SK Group for long-term blood transfusion.

Especially since 2023, power Battery global competition accelerated and SK On's financial data declined further. In 2023, the company reported an operating loss of 581.8 billion won, with a discount of 0.4227 billion dollars; The company continued to report losses in the first quarter of this year, with a loss of 331.5 billion won.

In the first quarter of this year, the installed capacity of SK On global power battery was 7.3GWh, down 8.2 percent year-On-year, and the market share was 4.6 percent, down 1.5 percent age points year-On-year. Later, Ford Motor, its important customer, also announced that in order to reduce the increasingly serious losses in the electric vehicle business, it would begin to cut orders from battery suppliers.

SK On claims HopeMake profits in the third or fourth quarter of this year and reach a break-even point in the second half of this year.

SK On's main product is soft pack battery, and it mainly uses ternary lithium battery. At a time when lithium iron phosphate batteries are popular all over the world, it is obviously difficult for a single ternary technology route to meet diversified market demands.

On May this year, SK Group announced plans to sell SKIET, a subsidiary of its battery materials, which aims to ease the economic pressure faced by SK On due to the weak demand in the electric vehicle market.

In addition, SK Group also plans to merge with its energy subsidiary SK E & S. It is expected that the combined new entity assets will reach 106 trillion won (about 555.4 billion yuan). Behind this merger strategy, we hope to improve the loss situation of SK On by integrating the resources of the two companies and using SKE & S's relatively stable financial situation to support the operation of SK On.

However, although this merger plan is attractive in theory, so far, the specific details and latest developments about the merger progress have not been announced to the public.

At present, SK On has migrated from soft packages to other products from the development level. SK On said that it would continue to invest in research and development projects to improve the competitiveness of automobile battery manufacturing and restructure the sales business to flexibly respond to market demands.