South Korean battery maker SK On has secured another US$2 billion in bank loans for its latest gigafactory in Hungary.  

The institutions participating in the financing included HSBC, BNP Paribas, Export–Import Bank of Korea, Korea Trade Insurance Corporation, and Euler Hermes. The lenders were advised by Milbank.

The debt facility supports SK On’s long-term plan to invest US$10 billion in the global expansion of its electric vehicle (EV) battery supply business.

Proceeds of the loan will be invested in its third battery factory in Europe, currently under construction in Ivancsa, Hungary.

With total planned investment of 3.31 trillion won (US$2.5 billion), the plant will have an annual production capacity of 30 gigawatt-hours (GWh) from 2024, enough to power 430,000 EVs each year.

German car manufacturers Mercedes-Benz and BMW already have large manufacturing plants in Hungary. In June of this year BMW laid the foundation stone for a 1 billion euro plant in Debrecen, which will start producing all-electric BMW New Class vehicles from 2025.

South Korea and China are the dominant players in EV manufacturing, and are setting up more factories overseas to shorten logistics chains and address the onshoring trend in the United States and Europe, which have been tightening local content or environmental rules.

China’s Contemporary Amperex Technology (CATL) is the world's largest EV battery producer, and in the coming months the first battery cells will come off the production line at its gigafactory in the German state of Thuringia.

In August CATL also announced it will be building a US$7.2 billion factory in Hungary. Covering an area of 221 hectares in an industrial park in Debrecen, the project will supply both battery cells and modules to European automakers. 

Debrecen is near the car manufacturing plants of its customers such as Mercedes-Benz, BMW, Stellantis and Volkswagen. CATL’s Debrecen plant will enable it to better cope with the demand in the European market, improve its global production network development, and help accelerate e-mobility and energy transition in Europe. 

To build a sustainable and circular battery value chain, CATL is also examining the possibility of joining forces with local partners to establish facilities for battery materials in Europe.