SK Innovation and Kia Motors join forces in latest of several Korean circular battery initiatives

SK Innovation and Kia Motors, a subsidiary to Hyundai Motor Group, have agreed to establish a joint circular ecosystem for EV batteries including both reuse and recycling. The cooperation will start in South Korea and then serve as a model to be used in the other markets where the companies operate.

According to the announcement Kia Motors will evaluate used batteries with a performance testing system and reuse those that exhibit good residual performance as energy storage systems (ESS) by classifying them into modules or packs. Hyundai, Kia's mother company has previously signed an agreement with Korean Power Logics which are developing dedicated BMS and power management solutions for second life systems and has also previous agreements with Korea Hydro & Nuclear Power Co, Wärtsilä (Greensmith Energy), OCI, and Hanwha Solutions to use the batteries in ESS in the US and South Korea.

Batteries that are not fit for purpose will be treated through SK Innovation's recycling system comprised of pre-processing and material recovery. The company has been developing recycling technology for many years which is optimized for both input and output of high nickel battery materials with lithium hydroxide and an NMC precursor as end products. IN particular the extraction of lithium hydroxide is notable as most recyclers are producing lithium carbonate which can't be used in high nickel cathodes. These materials will then be used for the production of new cathode materials. SK Innovation announced in 2020 that they aim to "insource" the production of cathode materials, something which so far has been supplied by fellow Korean company Ecopro.

Kia and SK Innovation are far from the first car maker and battery producer to join forces in recycling or reuse and often the cooperations in fact have little significance due to the fact that the OEMs rarely have control of the batteries unless they are returned under warranty. After eight years, or in the case of a crash, the battery will typically go to the highest bidder and will be lost for both car maker and battery producer.

There are however things that makes this cooperation particularly interesting:

First of all, this is only one component in SK Innovation’s strategy to create a closed-loop system which also involves several BaaS (battery as a service) initiatives. The company already have an agreement with Hyundai Motor Group to find new ownership solutions for the batteries including leasing and renting. In January this year SK Innovation made an investment in Blue Park Smart Energy (BPSE), a subsidiary of BAIC Group in China which offer battery swapping solutions. The decision to produce cathode material in-house could also be seen through this lens.

Secondly, the companies are located very close to each other not only in South Korea but also in Georgia, US and in Hungary/Slovakia in EU (less than 3 hours apart in both cases). This facilitates the combined reuse and recycling process as well as the management of production waste from all plants.

What’s also interesting is how the strategy coincides with SK Innovation’s rival LG Energy Solution. LG Energy Solution has also launched several BaaS initiatives including new BMS technology and cooperation with shared mobility and rental service companies in which the battery ownership is retained by LG. LG has also evaluated their own ESS at their Ochang plant in South Korea, a system that might be used for batteries from the latest recall for Hyundai (although a lot indicate they may as well be recycled). In Korean media there were also recently reports saying that LG Energy Solution is planning to set up their own recycling facilities, starting this year at their plant in China with the plants in Poland and South Korea to follow in 2022.

LG Energy Solution already has an agreement until 2024 with Ecopro to recover the major part of the battery producer’s production waste. The Korean steel maker Posco, which lately has become one of the leading cathode producers, also receives waste material from LG Energy Solutions and, indirectly through Sungeel Hitech, from Samsung SDI. It is not clear whether LG's latest initiative to recycle end-of-life batteries involves Ecopro or Posco.

Read SK Innovation’s announcement here.