SEOSAN, South Korea (Reuters) - South Korea's SK Innovation 096770.KS, a supplier of electric vehicle (EV) batteries to Daimler DAIGn.DE and Volkswagen VOWG_p.DE, aims to boost production capacity more than tenfold by 2022, betting on global demand.

FILE PHOTO: FILE PHOTO: The logo of SK Innovation is seen in front of its headquarters in Seoul, South Korea, February 3, 2017. REUTERS/Kim Hong-Ji/File Photo/File Photo

The company expects the battery business to break even in 2020, a senior manager said at a news conference on Wednesday at the company’s plant in Seosan, a three-hour drive from Seoul.

The outlook comes days after Mercedes maker Daimler said it would buy battery cells worth more than 20 billion euros ($23 billion) by 2030 as it readies mass production of hybrid and electric vehicles.

Daimler and other European automakers are aggressively expanding in electric vehicles as European regulators clamp down on diesel emissions.

SK Group Chairman Chey Tae-won has put more focus on the conglomerate's EV battery business as its memory-chipmaking unit SK Hynix 000660.KS faces a slowdown in demand from smartphone makers after a two-year-long boom.

On a wall at the Seosan plant, a handwritten message from Chey reads: “Til the day when all vehicles run with our batteries, and replace gasoline (vehicles), SK’s battery team will be up and running.”

Late to the EV battery market compared with rivals LG Chem 051910.KS and Samsung SDI 006400.KS, SK Innovation has announced investment plans worth about $3 billion since late 2017, to build new factories in China, Hungary and the United States.

China’s pledge to phase out subsidies for electric and plug-in hybrids by 2020, and an increase in the country’s EV sales quota will benefit SK Innovation, said Lee Du-beom of the company’s battery team.

Currently, EVs using South Korean batteries are not eligible for generous subsidies in China.

“We are not that worried about the China market,” Lee said. “We believe that global automakers as well as Chinese carmakers will need to obtain batteries from foreign battery manufacturers.”

SK Innovation plans to boost annual battery production capacity to 55 gigawatt-hours by 2022, from 4.7 gigawatt-hours a year currently, said Kim Tae-hyeon, who heads SK Innovation’s battery business team.

The company, which also owns South Korea's top refiner SK Energy [SKENGG.UL], counts Hyundai Motor Co 005380.KS as a client.

($1 = 1,125.4500 won)

($1 = 0.8770 euros)