Ford and SK On End $11.4 Billion US Battery Venture as EV Market Slows
Ford Motor Company and SK On, a South Korean battery maker, are set to end their joint venture in the US that was once considered a key factor in the production of domestic electric vehicle batteries. The step is a result of the changed demand in the EV market and the decision to rethink the strategic investments in battery manufacturing.
The alliance called BlueOval SK was created with a lot of enthusiasm and a joint investment of $11.4 billion. The idea was to install several battery factories in the US and have a local supply of cells for Ford’s EVs. However, the slow demand for EVs than anticipated and the alteration of federal incentives have been the main reasons for the drop of the incandescent vision. Therefore, the companies decided to end the joint venture and separate the assets.
Pursuant to the agreement, Ford is going to have full ownership of two battery plants that are to be built in Kentucky. SK On will take over the control of the plant in Tennessee and run it on its own. This separation is still pending regulatory approval and is anticipated to be completed in early 2026. Both companies will decide on the future use of these assets independently.
Although the joint venture is terminated, SK On is still willing to supply batteries to Ford. Besides, the company is eager to use the Tennessee plant to support other customers. This change is in line with the wider effort of SK On to increase its profitability and lower its debt after experiencing significant financial losses. Similar to other battery manufacturers, it is also entering the market of energy storage systems for such uses as data centers.
The break-up is indicative of the increasing doubts in the EV battery sector. The growth of EV sales has slowed down in the US after a period of rapid expansion. Without a federal tax credit for EV purchases, electric cars have become less affordable to certain buyers, thereby demand has dropped. Ford itself has admitted to these problems. It has encountered financial losses in its electric-vehicle division and has had to delay production schedules for some battery facilities.
The decision to change ownership structure is a result of a $9.6 billion loan from the U.S. Department of Energy that was instrumental in the original project. The loan was one of the largest ever under the Advanced Technology Vehicles Manufacturing program. Even with the loan and hefty investment, Ford’s Model e electric division has not been able to make a profit.
Ford announced that it would stay faithful to the electrification plan in spite of the obstacles. The company is still spending money on cheaper EV models and other innovations that could make electric vehicles more competitive. The separation of assets allows Ford to have greater authority over the battery supply chain and local operations. It also gives SK On the freedom to cater to a wider customer base and concentrate on areas where it foresees a quicker growth.
This news marks the change in the mindset of major automakers and battery producers with regards to their long-term commitment in the EV sector. It indicates that even hefty and well-funded projects may have to quickly adapt when there is a change in the market conditions.