SK On-Ford Joint Venture Considering Withdrawal from Turkey Battery Plant Project

Visitors at the SK On booth are examining the displayed NCM9 batteries at 'InterBattery 2022,' a specialized battery exhibition including secondary batteries held last March.
[Image source=Yonhap News]

[Asia Economy Reporter Jeong Dong-hoon] SK On is facing difficulties in establishing a joint electric vehicle battery factory in Turkey.

According to the battery industry on the 9th, the factory planned to be built near Ankara, the capital of Turkey, in collaboration with the American automaker Ford and the Turkish manufacturer Ko?, is reportedly considering withdrawing the business plan.

An SK On official stated, "Since the memorandum of understanding (MOU) signed last March, discussions with the joint venture partners have been ongoing but have not been finalized," adding, "However, no final decision has been made regarding the withdrawal of the business plan or suspension of negotiations."

Previously, in March last year, SK On signed an MOU to promote the establishment of a three-party joint venture with Ford and Ko?. The joint factory was planned to start commercial production from 2025 with an annual capacity of 30 to 45 GWh. Considering that approximately 15,000 electric vehicle batteries can be produced per 1 GWh, the scale corresponds to an annual production capacity sufficient for 450,000 to 675,000 electric vehicles. The total investment amount by the three companies is estimated to be up to 4 trillion KRW, with each company bearing one-third, resulting in a maximum investment amount of around 1.3 trillion KRW per company.

The reconsideration of the joint factory investment is largely influenced by the global economic downturn. Amid a complex crisis of high interest rates and high inflation, the global economy is widely expected to enter the early stages of a recession this year. Since the end of last year, Tesla has faced adverse conditions such as production cuts and reduced deliveries, raising concerns that the contraction in demand for Tesla, which sets the standard for electric vehicle demand, could spread across the entire electric vehicle market.

Accordingly, battery factories, which require investment amounts in the trillions of KRW even for a single plant, may face difficulties in financing. SK On, which has yet to achieve profitability, had a capital expenditure (CAPEX) of approximately 2.7848 trillion KRW as of the third quarter of last year. Large-scale facility investments are being made despite the company not generating profits.

This content was produced with the assistance of AI translation services.