SK On, Ford to set up battery JV in Turkey for Europe

South Korean battery maker SK On Co. and Ford Motor Co. will set up a joint venture to produce electric vehicle batteries in Turkey with a local company as the US automaker plans to launch new EVs in Europe. 

SK On, the world’s No. 5 battery maker, announced on Monday that it signed a memorandum of understanding with Ford and Turkey’s investment holding company Koç Holding AS for a battery factory with an annual capacity of 30 to 45 gigawatt-hours (GWh).

Koç, founded in 1926, established Ford Otosan in 1959 with the US automaker and has been manufacturing commercial vehicles in Kocaeli and other Turkish cities. Its annual capacity is 455,000 units.

The three companies plan to build the plant near Ankara and begin the production of high-nickel NCM (nickel-cobalt-manganese) batteries as early as 2025. The batteries will be used for electric commercial vehicles such as buses and trucks.

“It is the first in a number of significant electrification and commercial vehicle announcements we will make this year as part of the ongoing redesign of our operations to create a leaner, stronger and sustainable all-electric Ford business in Europe,” Ford of Europe chair Stuart Rowley said.

FORD TO LAUNCH SEVEN NEW EVS IN EUROPE

Ford unveiled a plan to introduce four new electric commercial vehicles and three electric passenger vehicles in Europe by 2024, following the launch of the all-electric Mach-E in 2021 and Mach-E GT this year, plus the launch of the E-Transit in the next quarter. The automaker aims to sell more than 600,000 EVs in the region by 2026.

Ford’s commercial vehicles have been the best sellers in Europe for the last seven years, while its passenger cars accounted for 4.4% of the regional market in 2021, according to the European Automobile Manufacturers’ Association (ACEA). That was around half of the 8.7% combined market share of Hyundai Motor Co. and Kia Corp. in the region.

Among commercial vehicles sold in Europe last year, electric models made up less than 4%, while more than 90% were powered by diesel engines. But industry sources expected strong growth in electric commercial vehicles in the region.

“Since the EU will in essence ban sales of internal combustion engine cars from 2035, electric models will be more popular in the commercial market,” said an industry source, referring to the European Union.

Last year, the European Commission announced the Fit for 55 campaign, which aims to cut greenhouse emissions by 55% by 2030. The measures include a de facto ban to sell gasoline and diesel cars in the EU by 2035.

SK ON TO SUPPLY MORE THAN 70% OF FORD’S BATTERY NEEDS

SK On is the first battery maker among South Korea’s major three players including LG Energy Solution Ltd. and Samsung SDI Co. to work with an automaker for battery production in Europe.

“I hope this extended partnership will contribute to Ford’s electrification strategy and by extension, to the growth of the EV industry and global carbon emission reduction,” said SK On CEO Jee Dong-seob.

SK On, wholly owned by SK Innovation Co., and Ford are building battery plants in the US through BlueOvalSK, a JV established last year. The US auto giant aims to secure 240 GWh of batteries by 2030. SK On is set to supply 170-180 GWh, or more than 70% of the total, including ones from the Turkish JV.

Jee said in a recent interview with the company's in-house news channel that the accumulated order volume has jumped 27 times to reach 1600 GWh and customers keep asking to increase the volume.

Write to Hyung-Kyu Kim at khk@hankyung.com
Jongwoo Cheon edited this article.