Ford JV “BlueOval SK” restructuring completed New independent U.S. base “SK On Tennessee” launched Ford to own and operate two Kentucky plants “Lower debt and fixed-cost burden… financial improvement expected” Stronger response to new demand such as ESS
SK On has completed the restructuring of BlueOval SK, a battery joint venture established with U.S. automaker Ford, and has converted its Tennessee plant into a wholly owned entity. The company stated that by unwinding the joint venture structure and strengthening its financial position, it has increased its operational autonomy over its U.S. production base.
SK On announced on the 21st that it is converting the BlueOval SK Tennessee plant into “SK On Tennessee” and commencing independent operation of the facility.
BlueOval SK had been a joint venture established on a 50:50 basis by SK On and Ford. However, as growth in the global electric vehicle (EV) market slowed and U.S. government policy shifted, demand for EV batteries fell short of expectations. In response, SK On and Ford agreed in December last year to operate the joint venture’s assets separately. Under the agreement, SK On would operate the Tennessee plant, while Ford, through a subsidiary, would own two plants in Kentucky.
Panoramic view of SK On’s Tennessee plant. Provided by SK On
At the time, SK On stressed that the decision was a strategic choice aimed at more effectively responding to changing markets and customer needs by enhancing productivity, operational flexibility, and response speed through selection and concentration. Analysts also noted that the market trend of rising demand for energy storage systems (ESS) for power supply, in addition to EV batteries, influenced the decision. In fact, SK On had previously announced plans to operate the 45 gigawatt-hour (GWh) Tennessee plant as a facility supplying both EV batteries and ESS.
SK On expects that the termination of the joint venture structure will reduce its borrowing burden by approximately KRW 5.4 trillion. Given the high interest rate environment, it anticipates annual interest expense savings of around KRW 270 billion. The company also expects a reduction in depreciation expenses of about KRW 330 billion per year related to the Kentucky plants, which is projected to have a positive impact on its overall financial structure.
An SK On official said, “Through this restructuring of the joint venture system, we have strengthened our financial structure and improved the efficiency of our production operations in the U.S.,” adding, “Based on the newly secured wholly owned production base, we will respond more proactively to changes in the North American market.”
Kim Min-beom
AI-translated with ChatGPT. Provided as is; original Korean text prevails.
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