SK On and U.S. automaker Ford are ending their joint venture in the United States. In 2022, the two companies each invested 50% equity to establish the U.S. battery manufacturing joint venture "BlueOval SK." BlueOval SK was operating or building a total of three plants—two in Kentucky and one in Tennessee—but the two companies have decided to unwind their equity relationship and operate the plants separately. For SK On, securing another standalone plant in the United States raises expectations for expanding mass production capacity of energy storage system (ESS) batteries, demand for which is growing, instead of electric-vehicle batteries.
SK On said on the 1st that it agreed with Ford to independently own and operate BlueOval SK's production plants. Going forward, SK On will operate one Tennessee plant on its own. Ford will operate Kentucky Plants 1 and 2 on its own through a subsidiary.
Accordingly, Ford will take all assets, liabilities, and contracts related to Kentucky Plants 1 and 2. SK On, in turn, will take all assets, liabilities, and contracts related to the Tennessee plant. Kentucky Plant 1 has been in operation since Aug., while Kentucky Plant 2 has yet to start operations. The Tennessee plant is currently under construction. By no longer bearing depreciation and interest expense incurred while operating Kentucky Plant 1, SK On will be able to reduce liabilities. According to the battery industry, SK On's liabilities are expected to fall by at least 5 trillion won.
Above all, SK On's ability to serve ESS demand is expected to improve. ESS demand is surging in the United States due to the expansion of artificial intelligence (AI) and data center construction. In Sept., SK On signed a supply contract with U.S. renewable energy company Flatiron Energy Development for lithium iron phosphate (LFP) batteries for ESS. After that, SK On planned to convert part of the electric-vehicle battery production line at its standalone Plant 1 in Georgia to ESS use and begin LFP battery production in 2026. With the Tennessee plant secured, the company now has the option to convert that plant for ESS as well.
An SK On official said, "This agreement is a strategic realignment of assets and production scale to improve operational efficiency," and added, "We will focus on strengthening profitability in the North American market by promoting the supply of electric-vehicle batteries and ESS batteries for Ford and other customers from the 45 gigawatt-hour (GWh) Tennessee plant."
However, SK On emphasized that even after ending the joint venture with Ford, it plans to continue its strategic partnership with Ford centered on the Tennessee plant. SK On said, "Through selection and concentration, this is a strategic choice to more effectively respond to changing markets and customer needs by improving productivity and increasing flexibility and speed of operations," and added, "The Tennessee plant is located within 'BlueOval City,' Ford's electrified vehicle and parts complex, which is advantageous for on-time battery supply."
The agreement is planned to be finalized by the end of the first quarter of 2026, once approvals from relevant authorities and other follow-up procedures are completed.