SK On has agreed with Ford to independently own and operate the production facilities of their U.S. battery manufacturing joint venture, ‘BlueOval SK’.

Analysts say the interests of automaker Ford, which has seen battery demand fall amid a slump in the electric-vehicle market and the U.S. government’s pro-internal-combustion-engine policies, and of battery-cell maker SK On, which needs to find new customers and diversify its product portfolio to include energy storage systems (ESS), have aligned.

On the 11th, SK Innovation announced via a disclosure of a capital-reduction decision that they had mutually agreed to independently own and operate BlueOval SK’s production facilities to enhance asset efficiency and secure operational flexibility.

The agreement is expected to be finalized by the end of the first quarter next year, following approvals from the relevant authorities and subsequent procedures.

Accordingly, SK On will operate the plant in Tennessee, while Ford, through a subsidiary, will operate the plant in Kentucky.

SK On explained that this decision is a strategic choice to raise productivity and enhance flexibility and responsiveness through ‘selection and concentration’, enabling a more effective response to changing markets and customer needs.

BlueOval SK is a battery company established in 2022 with a 50-50 investment by SK On and Ford.

SK On plans to maintain a strategic cooperative relationship with Ford centered on the Tennessee plant even after the joint venture is wound down. Located inside Ford’s electrified vehicle and parts complex, ‘BlueOval City’, the Tennessee plant is considered advantageous for timely battery supply.

An SK On official said, “This agreement is a strategic reconfiguration of assets and production scale to improve operational efficiency,” adding, “From the 45GWh Tennessee plant, we will promote the supply of EV batteries and ESS to Ford and a variety of other customers, seeking profitability-focused strengthening in the North American market.”