Ford and SK On End Joint Venture Amid Shifts in EV Market
In a significant move reflecting the current state of the electric vehicle (EV) market, Ford Motor Co. and its South Korean partner, SK On, have decided to terminate their joint venture. This decision underscores the industry’s struggle to meet anticipated demand for EVs.
SK On announced on Thursday its agreement with Ford to dissolve their partnership, which had initially committed $11.4 billion to develop battery plants in Kentucky and Tennessee. This development is another indication of the waning momentum for EVs in the United States. High costs, range concerns, and limited charging infrastructure continue to deter consumers, and the current administration’s rollbacks on EV mandates add to these challenges.
The separation is set to finalize in early 2026, allowing Ford to retain control over the BlueOval Battery Park in Glendale, Kentucky, valued at $5.8 billion. Meanwhile, SK On will take over the Tennessee facility in Stanton, part of a $5.6 billion project, which includes a Ford EV assembly plant. SK On plans to continue supplying Ford and other automakers, while also exploring opportunities in energy storage systems to offset low EV volumes.
“This agreement allows SK On to strategically realign assets and production capacity to improve its operational efficiency,” said Joe Guy Collier, spokesperson for SK On. “It also enables the company to enhance productivity, operational flexibility, and respond more effectively to evolving market dynamics and diverse customer needs.”
Ford’s spokesperson, Ian Thibodeau, acknowledged the situation but declined further comment. Following the announcement, Ford’s shares rose by 1.6%, closing at $13.63, surpassing major market indices.
Dan Ives of Wedbush Securities commented, “We believe the writing was on the wall,” highlighting the shift in EV market opportunities compared to previous years. He described Ford’s decision as a strategic necessity.
Financial details of how Ford intends to manage battery production in Kentucky without SK On’s partnership remain undisclosed. The U.S. Energy Department is reportedly restructuring the joint venture’s $9.6 billion loan, secured under the previous administration, to be smaller and repaid more swiftly, as per Bloomberg.
The automaker is advancing its battery technology by licensing from China’s Contemporary Amperex Technology Co. Ltd. for cost-effective lithium-iron-phosphate batteries at its Michigan site. According to Sam Abuelsamid of Telemetry Agency, retaining the Kentucky plants aligns with Ford’s EV strategy due to their strategic location.
Ford’s research and development in Romulus have yielded lithium manganese-rich batteries, promising greater energy density at lower costs than existing technologies. This innovation could benefit the Kentucky facilities.
Despite a slow EV sales forecast, Abuelsamid noted, “Sales have slowed, and they will likely stay relatively slow for the next few quarters.” The joint venture’s dissolution raises questions about labor implications, with BlueOval SK External Affairs working on transition plans for employees.
The United Auto Workers have yet to comment on the unionization vote at the Kentucky plant, where a narrow victory was claimed in August. The relevance of this vote remains uncertain following the venture’s dissolution.
Ford’s EV sales dropped 61% in November year-over-year, impacted by the expiration of the federal tax credit. CEO Jim Farley predicted a significant industry-wide sales decline without this support.
Political factors, such as the Trump administration’s deregulation efforts, have influenced the automotive landscape, prompting investment shifts towards traditional vehicles. General Motors and Stellantis have adjusted their strategies, scaling back EV projects in favor of profitability and traditional vehicle production.
Despite these challenges, Ford remains committed to EV innovation, planning to introduce a cost-competitive midsize electric truck by 2027 and an electric full-size pickup by 2028.
SK On, facing an $84.7 million operating loss in the third quarter, is pivoting towards energy storage systems, a strategy echoed by competitors LG Energy Solutions and Samsung SDI.
Ford’s Lisa Drake indicated potential for future energy storage applications at joint-venture battery facilities, noting, “It wouldn’t surprise me in the future… that we can consider that.”
Original Story at www.detroitnews.com