ford and sk innovation announce battery manufacturing joint venture blueovalsk
Ford and SK Innovation Form Battery Joint Venture
A memorandum of understanding has been signed between Ford Motor Company and SK Innovation, a company headquartered in Seoul, South Korea, to create a joint venture focused on the domestic production of electric vehicle batteries. This collaboration, named BlueOvalSK, is projected to yield approximately 60 GWh of battery capacity annually, beginning in the mid-2020s.
This agreement signifies Ford’s increasing commitment to developing its battery production capabilities internally. The company is strategically moving towards greater self-sufficiency in battery supply.
Justification for Investment
Initially, procuring batteries from external suppliers was deemed the most efficient approach, particularly with limited production volumes like the Mustang Mach-E. However, as electric vehicle adoption expands beyond early adopters, Ford now possesses the necessary scale to justify substantial investment in battery manufacturing, according to Hau Thai-Tang, Ford’s chief product platform and operations officer.
Venture Details and Capacity
The specifics of the ownership structure are still under development, as stated by Lisa Drake, Ford’s chief operating officer. The planned 60 GWh annual production capacity is anticipated to be distributed across two manufacturing facilities.
The precise locations of these plants throughout North America are currently being determined. This level of battery production is sufficient to power roughly 600,000 vehicles annually.
Ford's Expanding Battery Initiatives
Recent months have seen Ford actively pursuing a vertically integrated battery manufacturing strategy. In April, the company announced the establishment of a battery technology development center in Michigan.
Furthermore, Ford, alongside BMW, participated in a $130 million Series B funding round for Solid Power, a developer of solid-state battery technology.
Shift in Strategy
Ford’s approach to battery production has evolved over time. Hau Thai-Tang noted that the company’s product plans have undergone significant changes, leading to this renewed focus on in-house battery manufacturing.
Timing with F-150 Lightning Debut
This announcement follows closely on the heels of the unveiling of the F-150 Lightning, the electric variant of Ford’s best-selling truck. The Lightning represents one of three EVs introduced by Ford in the past year.
These initiatives are central to the company’s planned $22 billion investment in electric vehicles through 2025.
SK Innovation's Existing Presence
SK Innovation is already actively establishing a manufacturing footprint in the United States. The company currently has two EV battery plants under construction in Georgia, representing a combined investment of $2.6 billion.
One plant is already operational, while the other is scheduled to commence operations in 2023. Additionally, SK Innovation is constructing a separate facility in Tennessee, serving Volkswagen AG as a customer.
Ford initially selected SK Innovation as its battery supplier for the Lightning in 2018, demonstrating a long-standing relationship between the two companies.
Resolution of Trade Secret Dispute
SK Innovation recently resolved a trade secret dispute with LG Energy Solutions, reaching a $1.8 billion settlement in April. This resolution averted a potential shutdown of SK Innovation’s Georgia operations, following a two-year legal battle.
Industry Investment in US Battery Manufacturing
Both Korean conglomerates, SK Innovation and LG Energy Solution, have made substantial investments in American battery manufacturing, often in partnership with major automakers. LG Energy is developing manufacturing facilities in Ohio and Tennessee through its joint venture with General Motors, Ultium Cells LLC.
Strategic Timing
Lisa Drake emphasized that the current market conditions and Ford’s strategic position make this the opportune moment to embark on this venture. The scale of the opportunity and the timing are ideal for initiating this significant undertaking.