The three domestic battery cell manufacturers, LG Energy Solution, Samsung SDI, and SK On, are consecutively converting the battery joint-venture plants they set up with automakers in North America into standalone plants. They had established joint ventures (JVs) with automakers such as General Motors (GM), Ford, and Stellantis in the United States and Canada to build battery plants for electric vehicles, but they are now moving to withdraw from those partnerships one after another.
The reason cited for wrapping up EV joint ventures is a slowdown in EV demand due to the U.S. administration of Donald Trump eliminating the EV tax credit. In fact, EV demand slowed in the North American market in the second quarter of this year. Still, when converting to standalone plants, battery cell companies have the advantage of being able to produce batteries for energy storage systems (ESS), where demand is rising, without additional expense.
According to the industry on the 17th, Samsung SDI recently said it will convert into a standalone plant the joint-venture plant being built in Indiana through the joint venture Synergy Cells, which it set up with GM. To do so, Samsung SDI will acquire the entire 49.99% equity in Synergy Cells held by GM.
Earlier, LG Energy Solution also cleared its equity in a planned joint-venture plant in North America. In Apr. last year, LG Energy Solution acquired for about 3 trillion won all assets related to the third plant among the Ultium Cells plants 1, 2, and 3, its joint venture with GM.
Ultium Cells plant 3 was established to produce batteries for GM's electric vehicles. However, as GM adjusted its EV production plans conservatively, it was converted into an LG Energy Solution standalone plant.
LG Energy Solution also ended operation of the battery joint venture it established with Stellantis in Canada. In Feb., LG Energy Solution agreed to acquire 49% equity in the joint venture "NextStar Energy" held by Stellantis.
NextStar Energy is a battery production company jointly funded by the two firms. More than 5 billion Canadian dollars was invested in the Ontario, Canada, plant. LG Energy Solution acquired the 49% equity in NextStar Energy by paying only a symbolic $100.
SK On also completed a restructuring of BlueOval SK, its joint venture with U.S. automaker Ford, in May. SK On had been building plants in Tennessee and Kentucky with Ford. The two companies decided last Dec. to end the BlueOval SK joint venture.
Accordingly, SK On will independently own and operate the Tennessee plant, while Ford will independently own and operate the Kentucky plants 1 and 2. SK On changed the name of the "BlueOval SK" Tennessee plant to "SK On Tennessee."
In the end, the number of joint-venture battery plants with automakers that the three battery firms operate in North America has decreased. LG Energy Solution's joint-venture plants in North America have been reduced to four: Ultium Cells plant 1 (Warren, Ohio) and Ultium Cells plant 2 (Spring Hill, Tennessee), both joint ventures with GM, as well as the Jeffersonville, Ohio, plant established with Honda, and the Ellabell, Georgia, plant built with Hyundai Motor.
Samsung SDI is operating joint-venture plants 1 and 2 with Stellantis in Kokomo, Indiana. For SK On, the only joint-venture plant still operating in North America is the Georgia plant with Hyundai Motor.
The biggest factor in winding down battery joint-venture plants with automakers is the slowdown in EV demand. According to market research firm SNE Research, EV sales in North America in the first half of this year were 681,000 units, down 20.5% from the same period last year. By contrast, sales of hybrid vehicles in the United States reached 1,162,970 in the first half of this year, up 15.3% from the first half of last year.
The hybrid market grew in the United States because the Trump administration withdrew the tax credit previously offered for EVs in Sep. last year, increasing the price burden of EVs. As hybrids gained popularity, GM and Ford moved to revise their strategies for expanding EVs.
According to the Financial Times (FT) in the United Kingdom, GM, which had a limited lineup of hybrids, is exploring reintroducing hybrid models. Ford decided to offer a hybrid option on every gasoline model by 2030.
Instead, battery companies can expect the effect of securing plants to meet ESS demand by ending joint ventures. The three battery firms are moving quickly to convert the plants whose joint ventures with automakers ended into ESS-dedicated facilities.
LG Energy Solution has been mass-producing ESS-use LFP batteries since the end of last year at the Ontario, Canada, plant where it ended its joint venture with Stellantis. LG Energy Solution also plans to produce ESS-use LFP batteries at Ultium Cells plant 3 in Lansing, Tennessee.
Samsung SDI likewise plans to produce ESS batteries at the New Carlisle, Indiana, plant that it has now converted into a standalone facility after ending the joint venture. SK On is also reviewing a plan to produce ESS batteries from 2028 at the Tennessee plant converted into a standalone facility.
A battery industry official said, "With the EV market slump prompting automakers to revise their electrification strategies, it became impossible to leave plants idle," and added, "For battery companies, converting EV battery plants with lower utilization into ESS-dedicated plants, where demand has increased, can shorten the time needed to build new plants."