[Edaily Reporter JAEMIN SONG ] SK On posted an operating loss of 80.5 billion won in the third quarter of this year, slipping back into the red after just one quarter of profitability. This was driven by a decline in electric vehicle battery sales and a base effect resulting from one-time gains in the previous quarter. SK On plans to improve profitability by expanding its energy storage system (ESS) business.

According to SK Innovation on the 29th, SK On’s third-quarter battery business revenue totaled 1.5263 trillion won, with an operating loss of 80.5 billion won. Revenue fell 48.2% from the previous quarter and 23.0% year-over-year. Although the company posted an operating profit of 821.8 billion won in the second quarter, it slipped into the red just one quarter later. However, compared to the operating loss of 124.8 billion won during the same period last year, the deficit narrowed by 44.3 billion won.

The decline in electric vehicle battery sales and the absence of one-time gains recognized in the previous quarter impacted the results. SK On maintains that its underlying profitability, excluding one-time factors, is improving.

The key strategy for a turnaround is the expansion of the ESS business. Following the signing of a contract with U.S. ESS company Neovolta to supply a total of 9 gigawatt-hours (GWh) of lithium iron phosphate (LFP) battery cells over five years starting in 2027, SK On is currently in discussions with customers in North America and South Korea for additional orders.

In particular, the company explained that the U.S.’s tightening of regulations targeting China is creating new opportunities for securing orders. During its third-quarter earnings conference call held today, SK On stated, “There is growing interest, particularly among U.S. ESS operators and system integrators that previously used Chinese-made cells, in securing non-Chinese cells and stable supply sources.”

The company added, “We are seeing an increase in inquiries from companies that previously used Chinese-made cells regarding product specifications, available supply volumes, pricing terms, and the possibility of long-term contracts.” However, SK On predicted that actual contract conversions will be determined after comprehensively considering factors such as price, local procurement requirements, certification, and delivery schedules.

The company is also pushing ahead with a production system transition to meet rising ESS demand. SK On is converting part of the electric vehicle battery production lines at its Seosan Plant 2 in South Chungcheong Province and its Georgia plant in the U.S. into production lines for LFP batteries for ESS. The strategy is to prioritize the use of existing facilities over new expansions to minimize the investment burden.

SK On estimates this year’s demand in the North American ESS market to be between 80 and 100 GWh and forecasts that the market size will more than double by 2030. The company is also developing multifunctional integrated ESS products for artificial intelligence (AI) data centers in collaboration with group affiliates such as SKTelecom.

In the fourth quarter, the company expects an increase in battery supply volumes driven by a recovery in electric vehicle sales among its major customers. During a conference call held today, SK On stated, “Although market uncertainty may persist in the fourth quarter, we will continue the trend of improving profitability and strengthen the foundation for a medium- to long-term turnaround by optimizing production and supply operations in line with customer demand, implementing company-wide cost reductions, and focusing on securing ESS orders.”