SK Innovation, the energy arm of South Korea’s SK Group, has announced a strategic merger between its electric vehicle battery subsidiary SK On and its lubricants and cooling solutions unit SK Enmove. The merger, approved by the boards of all three companies on July 30, is set to take effect on November 1, 2025. SK On will absorb SK Enmove’s operations as part of a broader plan to strengthen competitiveness in the global EV and electrification market.
Alongside the merger, SK Innovation will launch a large-scale capital expansion initiative worth 8 trillion Korean won (approximately 5 billion euros). The move is aimed at streamlining operations, improving financial stability, and boosting growth in energy and electrification technologies. The integration is also expected to enhance battery performance and safety by leveraging SK Enmove’s immersion cooling technology.
The merger comes at a time when SK On, one of South Korea’s top EV battery producers, is facing headwinds due to slower-than-expected growth in global electric vehicle (EV) sales. Meanwhile, SK Enmove brings expertise in lubricants, immersion cooling, and thermal management technologies used in EVs and energy storage systems (ESS). The integration of these two entities is expected to create synergies that enhance technological capabilities and market reach, supporting SK Innovation’s ambition to lead in the global electrification space.
By combining operations, SK Innovation aims to strengthen its electrification portfolio and unlock new revenue streams. The merger is expected to allow both companies to leverage a shared customer base, cross-sell products, and develop integrated solutions—such as pairing immersion cooling systems with EV batteries. These synergies are projected to help SK On enter new markets more efficiently and expand its offerings in thermal management and battery safety technologies.
A key component of the restructuring is a significant capital expansion plan. SK Innovation and its affiliates aim to raise a total of KRW 8 trillion (roughly USD 5.7 billion) this year. This includes KRW 2 trillion each from SK Innovation and SK On through third-party allotments, KRW 700 billion from perpetual bonds, and KRW 300 billion from SK IE Technology. Additional fundraising of KRW 3 trillion is also planned before year-end to support continued investment and debt reduction.
In parallel, SK Innovation will purchase all outstanding convertible preferred shares in SK On held by financial investors for KRW 3.588 trillion. The move is part of a broader effort to consolidate control over its key EV battery subsidiary and reduce shareholder complexity. SK Innovation also acquired all external shares of SK Enmove earlier this year, paving the way for a smoother merger process.
Immersion cooling—one of SK Enmove’s key technologies—involves submerging batteries in a non-conductive liquid to manage heat more efficiently than traditional air or water-based systems. SK On plans to incorporate this method into its EV batteries and ESS units to enhance thermal control, prolong battery lifespan, and mitigate safety risks such as overheating and fires. This integration is expected to give SK a competitive edge, especially as the global market for ESS and high-performance batteries continues to grow.
To reinforce its financial position, SK Innovation is also pursuing asset optimization measures worth over KRW 1.5 trillion by selling non-core assets in 2025. Together with capital expansion and preferred share buybacks, these efforts are projected to reduce the company’s net debt by over KRW 9.5 trillion this year. The long-term financial goal is to maintain net debt below KRW 20 trillion while reaching KRW 20 trillion in EBITDA by 2030.
The merger is part of a larger structural overhaul across SK Innovation’s energy and battery businesses. Previous efforts include consolidating SK E&S and LNG operations into the main group structure. With the new SK On–SK Enmove entity, SK Innovation aims to complete its vertically integrated electrification portfolio, enabling stable, long-term growth in EV batteries, ESS, and energy solutions amid increasing global demand.
