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EV batteries

SK Innovation, Ford to invest $11.4 billion to build largest EV battery JV

With its single largest investment in the US, SK aims to become the top battery maker securing more supplies to Ford

By Sep 28, 2021 (Gmt+09:00)

SK Innovation's EV battery plant under construction in the US state of Georgia
SK Innovation's EV battery plant under construction in the US state of Georgia

SK Innovation Co. and Ford Co. will invest a combined $11.4 billion to build an assembly and battery complex and two additional battery factories in the US to accelerate the US auto giant’s rollout of electric vehicles.

A 50-50 joint venture between SK and Ford, called BlueOvalSK, will build an assembly and battery plant in Tennessee, and two other battery factories in Kentucky, which will mark the single largest investment in Ford's 118-year history, the two companies said in a statement on Tuesday.

The BlueOvalSK battery plants, set to open in 2025, will be the largest ever in the US.

The three factories will have an annual production capacity of 129 gigawatt-hours (GWh), enough to supply 2.15 million EVs a year.

With the investment, SK Innovation is positioned to become the top battery maker in the US after securing more supplies to Ford, according to the South Korean company.

“We are proud to be partnering with Ford as they open a new chapter in the automobile history,” said Jee Dong-seob, president of SK Innovation’s battery business. “We are excited to be taking this decisive leap together, as a partner, and to bring about our common vision for a cleaner planet."

Following a board of directors meeting in Seoul on Monday, SK Innovation said it is spending up to $6.4 billion, its single largest investment ever, in the BlueOvalSK battery plants by 2027 in the form of providing the capital to its US battery affiliate, SK Battery America Inc.

SK Innovation said it will invest $4.45 billion in the construction of the BlueOvalSK plants. This amount is equivalent to its 50% stake in the joint venture.

BlueOvalSK's new battery plant sites
BlueOvalSK's new battery plant sites

DOUBLE THE INVESTMENT


The planned lithium-ion battery plants build on a memorandum of understanding announced by SK Innovation and Ford in May.

The two companies said at the time they planned to launch a 6 trillion won ($5.3 billion) JV to support the US auto giant’s rollout of its electric cars, including trucks.

“This is a transformative moment where Ford will lead America’s transition to electric vehicles and usher in a new era of clean, carbon-neutral manufacturing,” Ford Executive Chair Bill Ford said on Tuesday.

SK Innovation is already constructing two battery plants worth $2.6 billion in the US state of Georgia, which will supply EV batteries to Ford and Volkswagen AG.

The first plant is set to begin operations in the first quarter of next year, with the second plant scheduled for mass production in 2023. The second plant is dedicated to batteries to be used in Ford’s F-150 pickup.

Ford is pushing to electrify key models in its lineup, including the Transit van later this year and the F-150 pickup in mid-2022. It has said it will invest $22 billion in electrification through 2025.

Ford Motor's new electric F-150 Lightning pickup truck
Ford Motor's new electric F-150 Lightning pickup truck

GREATER OUTPUT CAPACITY

SK Innovation, which supplies batteries to carmakers such as Hyundai Motor Co., Volkswagen and Ford, has been aggressively expanding facilities worldwide, with an aim to emerge as one of the top three players.

With production sites in the US, Hungary, China and South Korea, SK currently has an annual battery capacity of about 40 GWh.

SK Innovation earlier said it aims to ramp up its yearly battery capacity to 125 GWh by 2025.

However, with the latest announcement to build the BuleOvalSK plants, together with SK’s two other EV battery plants under construction in Georgia, the company will be able to produce 150 GWh annually in the US alone.

Consequently, SK Innovation will have secured more than 200 GWh production capacity a year globally by 2025.

Meanwhile, SK Innovation is set to split off its battery unit into a separate entity this Friday to foster new growth drivers under its plan to invest 30 billion won by 2025 to transition from a carbon-intensive model to a green business.

Write to Il-Gue Kim at black0419@hankyung.com

In-Soo Nam edited this article.

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