SK On and Ford to Independently Operate U.S. Joint Venture 'BlueOvalSK'... Operational Efficiency Up

Enhancing Operational Efficiency Through "Selection and Concentration"
Strategic Partnership with Ford to Continue

SK On has decided to restructure the operational framework of BlueOvalSK, its U.S. battery manufacturing joint venture with Ford Motor Company, in which both companies hold a 50-50 equity stake. As part of SK Group's business rebalancing initiative, this restructuring will enable SK On to respond to market changes in a timely manner and accelerate its energy storage system (ESS) business in North America. Additionally, the company expects to improve its financial structure and profitability through a significant reduction in borrowings and fixed costs.

Exterior view of BlueOvalSK Tennessee plant located in Tennessee, USA. SK On

On the 11th, SK On announced that it had reached a mutual agreement with Ford to independently own and operate the production facilities of BlueOvalSK. As a result, SK On will operate the plant located in Tennessee, USA, while Ford, through its subsidiary, will operate the plant in Kentucky, USA. The transition is expected to be completed by the end of the first quarter of 2026, pending regulatory approval and other subsequent procedures.

This decision is a strategic move by SK On to enhance productivity, operational flexibility, and response speed through a "selection and concentration" approach, thereby enabling the company to more effectively meet the evolving demands of the market and customers.

Even after the dissolution of the joint venture, SK On plans to maintain a strong strategic partnership with Ford, centered on the Tennessee plant. The Tennessee plant is located within BlueOval City, Ford's electrified vehicle and parts complex, which offers advantages for the timely supply of batteries.

According to SK On, the Tennessee plant will prioritize fulfilling existing programs ordered by Ford and will determine the commercial operation (SOP) schedule in line with the electrification strategies of North American clients. As SK On will own 100% of the Tennessee plant, it is expected to produce batteries for other North American automotive original equipment manufacturers (OEMs) in addition to Ford, thereby increasing its utilization rate.

Through this restructuring, SK On anticipates improvements in its financial structure resulting from a substantial reduction in borrowings, as well as improved profitability and cash flow driven by lower interest expenses and a reduction in the number of plants, which will decrease fixed costs. BlueOvalSK currently has loans of approximately 10 trillion won from the U.S. Department of Energy, and as part of the restructuring, a portion of this debt will be transferred to Ford, further easing SK On's interest burden.

Previously, last month, SK On agreed to exchange shares in two jointly operated plants in China with Chinese battery company EVE Energy, allowing SK On to focus on operating new plants.

An SK On representative stated, "This agreement is a strategic restructuring of assets and production scale to enhance operational efficiency," adding, "We will focus on strengthening profitability in the North American market by supplying batteries and ESS for electric vehicles to Ford and other clients from the 45GWh-capacity Tennessee plant."

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