By Heekyong Yang, Hyunjoo Jin and Joyce Lee
SEOUL, Dec 11 (Reuters) - South Korean battery maker SK On said on Thursday that it has decided to end its joint venture with Ford Motor for their joint battery factories in the U.S. as part of a business overhaul to focus on growth areas like energy storage systems.
The split marks a reset for one of the major U.S. electric vehicle battery partnerships, coming as slowing EV demand and the loss of U.S. subsidies push South Korean battery makers to reshape
their U.S. strategies and accelerate expansion into the energy storage systems business.
SK On, a subsidiary of SK Innovation, which supplies automakers including Hyundai Motor and Kia Corp, said a Ford subsidiary will take full ownership of the battery plants in Kentucky, while SK On will assume full ownership and operate the Tennessee plant.
"The production start schedule for the Tennessee plant remains flexible at this time, as it is related to the ownership transition," SK On said.
In 2022, SK On and Ford invested $11.4 billion to build the joint battery plants in the United States.
SK On said the move reflected a strategic overhaul of assets and capacity aimed at enabling it to respond more quickly to market changes, accelerate its North American energy storage system business, and strengthen productivity and cost competitiveness in its battery operations.
The company said the restructuring is expected to improve its financial structure and profitability by sharply reducing debt and cutting fixed costs.
SK On posted an operating loss of 124.8 billion won ($84.72 million) for the July-September period, nearly double the 66.4 billion won loss in the previous quarter due to slowing EV battery shipments.
In September, Ford CEO Jim Farley predicted that electric-car sales could fall by around 50% following the September 30 expiration of a $7,500 tax credit for buyers.
SK On has been expanding into the energy storage system business to offset weaker EV demand. In September, the company signed a deal with U.S.-based Flatiron Energy Development to supply lithium iron phosphate (LFP) batteries for energy storage systems.
Other South Korean battery makers, including LG Energy Solution and Samsung SDI, have also been repurposing EV battery production lines to produce energy storage systems due to the phasing out of U.S. subsidies.
Energy storage batteries have a similar chemistry to automotive batteries and are used to power facilities such as data centres.
($1 = 1,473.0200 won)
(Reporting by Joyce Lee, Heekyong Yang, Hyunjoo Jin; Editing by Ed Davies)
