South Korean electric vehicle (EV) battery manufacturer SK On plans to invest KRW1.5trn (US$1.1bn) to quadruple its domestic battery production capacity by 2028 to meet rising demand from local vehicle manufacturers.

SK On, part of local energy and chemicals chaebol SK Group, made the announcement after it signed a memorandum of understanding (MoU) with the Seosan city government and the South Chungcheong provincial government to build a third battery cell factory in the Seosan Auto Valley complex.

The new plant was scheduled to be completed in 2025 with an initial production capacity of 14 gigawatt hours (GWh) per year. The company’s two existing facilities in Seosan will be upgraded to smart factories to improve manufacturing efficiency, speed production by 30% and improve process accuracy.

SK On said the investment would increase its EV battery cell production capacity in South Korea to 20GWh per year by 2028, enough to power 280,000 EVs, from 5GWh at present. The company’s investment strategy in the last five years has been focused on overseas expansion mainly in the US, Europe and China.

The new facility is scheduled to come on stream as Hyundai begins mass production of EVs at its the Ulsan plant in South Gyeongsang Province at the end of 2025, with a production capacity of 150,000 EVs a year, and the launch of production of the Kia EV7.