Ford, SK On End EV Battery Venture Amid Slowing Demand
▼ Summary
– In 2021, automakers like Ford were aggressively investing in an electric future, exemplified by Ford’s $11.4 billion joint venture with SK to build two battery plants.
– By 2024, the EV market outlook shifted dramatically due to the end of subsidies and reduced government pressure, leading automakers to scale back electric vehicle plans.
– Ford and its partner SK On have now ended their battery factory joint venture, reflecting the decreased need for batteries as EV demand weakens.
– Ford had already signaled this shift by canceling multiple EV strategies in 2024 and postponing a fully electric F-150 Lightning replacement.
– The two battery plants will be separated, with Ford taking full ownership of the Kentucky facility and SK On focusing the Tennessee plant on the energy storage market.
The landscape for electric vehicles has shifted dramatically since the initial wave of industry enthusiasm. Ford and SK On have officially dissolved their high-profile battery manufacturing joint venture, BlueOvalSK, a direct response to cooling consumer demand and a strategic recalibration within the auto sector. This move marks a significant retreat from the ambitious plans announced in 2021, which envisioned an $11.4 billion investment to construct twin battery plants in Kentucky and Tennessee, promising thousands of jobs and a massive annual production capacity.
Back in that period of peak optimism, automakers were aggressively laying the groundwork for an all-electric future, spurred by climate initiatives and soaring market valuations for EV pioneers. Ford’s partnership with SK On was a cornerstone of that strategy, designed to secure a domestic supply of the crucial battery cells needed to power its coming fleet of electric models. The planned output from the two facilities was intended to reach a combined 60 gigawatt-hours annually.
Market realities have since intervened, prompting a widespread industry reassessment. Government incentives have waned, and automakers are no longer facing the same regulatory pressures to rapidly phase out internal combustion engines. Consequently, many companies, including Ford, have scaled back their most ambitious electric vehicle product plans. This pivot means a reduced need for battery production capacity in the near term, making large-scale joint ventures less tenable.
The decision to unwind the partnership does not come as a complete surprise to industry observers. Ford had already signaled a major strategic shift earlier in the year, publicly revising its EV roadmap on multiple occasions. Notably, disappointing sales figures for the electric F-150 Lightning led the company to postpone a planned next-generation electric truck, opting instead to develop a more affordable midsize model for a later launch.
Under the terms of the dissolution, the companies will divide the assets. A Ford subsidiary will take full ownership of the Kentucky battery plant site, while SK On will assume complete control of the Tennessee facility. Reports indicate that SK On’s decision was driven by a pessimistic outlook for U.S. electric vehicle sales growth. Rather than focusing solely on the automotive market, the company now plans to dedicate the Tennessee plant’s output toward the burgeoning energy storage sector, which is seen as a more stable and promising market. This split allows each party to pursue its own strategic priorities independently amid an uncertain electric vehicle landscape.
(Source: Ars Technica)
