On June 25, 2024, U.S. energy giant ExxonMobil announced a non-binding agreement with Korean SK Group’s battery manufacturing subsidiary SK On. Under the agreement, ExxonMobil will supply SK On with lithium from its proposed Arkansas project. This partnership marks the two companies’ important strategic layout in the electric vehicle battery supply chain and is expected to have a profound impact on the global electric vehicle market.

The Arkansas Lithium Project

In November last year, ExxonMobil announced plans to mining salt water in Arkansas to produce lithium. Arkansas is believed to have a large amount of lithium metal, making the region an ideal location for lithium mining. ExxonMobil plans to use underground salt water mining machines to extract lithium and convert it into battery-grade materials in Arkansas. This method is more efficient than traditional hard rock mining and has less environmental impact.

Details and Impact of the Agreement

ExxonMobil said the agreement with SK On could be a multi-year contract agreement, up to 100,000 tons, which will help ExxonMobil its goal at the end of 2023, of supplying lithium for approximately 1 million electric vehicle batteries annually by 2030, and support the establishment of the American electric vehicle supply chain.

ExxonMobil has been able to strategically position itself in the electric vehicle ecosystem through its partnership with SK On. Investors are closely watching the energy giant’s financial situation and market performance, and this partnership will undoubtedly enhance ExxonMobil’s competitiveness in the electric vehicle market.

ExxonMobil’s Market Positioning and Financial Performance

ExxonMobil is recognised as an outstanding player in the oil, gas and consumable fuel industries, with cash flows sufficient to pay interest. ExxonMobil has a market value of $4498,6 billion, and its stunning record of increasing dividends for 41 consecutive years is sufficient to prove its stability and long-term shareholder value.

These factors are important for investors given the company’s role in the growing electric vehicle market and the company’s recent initiative to diversify its supply of lithium batteries for electric vehicles.This collaboration with SK On will further strengthen ExxonMobil’s position in the new energy market.

SK Ons market layout and production capacity

SK On currently supplies Volkswagen and Ford, operating two battery plants in Commerce, Georgia, and building four more battery plants through a joint venture with Ford Motor Company and Modern Automobile Group. SK On is expected to have an annual production capacity of more than 180GWh in the United States alone after 2025, enough to power about 1.7 million electric vehicles.

Park Jong-jin, executive vice president of strategic procurement at SK On, said: “We will continue to strengthen the battery supply chain in the United States through our partnership with ExxonMobil.”This demonstrates SK On’s strong capabilities not only in battery manufacturing, but also in supply chain management and strategic cooperation.

The Future of the Electric Car Market

As the global demand for electric vehicles increases, lithium as a key material for electric vehicle batteries, its supply chain stability and sustainability becomes especially important.ExxonMobil’s partnership with SK On will not only help meet the demand for lithium in the future electric vehicle market, but will also drive the further development of the electric vehicle industry chain.

In addition, ExxonMobil’s Arkansas lithium project uses a method of salt water lithium extraction that is more environmentally friendly than traditional hard rock mining.The application of this technology will not only help reduce the environmental impact of lithium production, but will also improve lithium production efficiency and provide a more stable and efficient lithium supply to the electric vehicle market.