Ohio, Texas emerge as candidates for SK-Ford battery joint venture
U.S. President Joe Biden delivers remarks after touring the Ford Rouge Electric Vehicle Center in Dearborn, Mich., May 18. Reuters-Yonhap
By Kim Yoo-chul
Two U.S. states ― Ohio and Texas ― are emerging as the candidates to house SK Innovation's (SKI) battery joint venture with Ford Motor, with Ohio gaining a slight edge over Texas, two sources told The Korea Times, Sunday.
A few weeks ago, SKI and Ford said they signed a memorandum of understanding for a battery joint venture that would be called “BlueOvalSK.” Production of battery cells as well as support modules is set to start by 2025, according to the companies.
Sources and officials familiar with the issue said both SKI and Ford are expected to launch the venture firm by July at the earliest, and it is set to go online around 2025. At least three years are required to set up necessary equipment before the venture starts actual, “meaningful” operation.
“Ohio and Texas are emerging as the candidates for the venture's new battery plant. But I would say Ford is apparently preferring to decide on Ohio as the venture's headquarters,” an industry executive said. Ohio is considered one of the manufacturing hubs for U.S. carmakers.
The state is the second-largest in terms of the total number of workers in the automotive industry. Over the last five years, Ford was the biggest automotive investor in the state of Ohio by investing some $1.37 billion, followed by General Motors, according to industry watchers. The state is also the home to an LG Energy Solution (LGES) battery joint venture with GM, which will become operational from next year.
But the central point, according to the executive, is that Ford is aiming to minimize the effects of its business rearrangement plan, because the carmaker was planning to return to its earlier agreement to build a “next-generation vehicle” by 2023 at the Avon Lake Ford plant in Ohio. It is said to be moving a major project slated for 2023 from northeastern Ohio to its plant in Mexico.
“Given Ford's commitment, which said earlier it would invest $900 million in a new project at the Avon Lake plant, and its moves to possibly rearrange its business plans by reducing fixed costs, if the new SKI-Ford joint venture is established in Ohio, that could fill the possible void of job losses and address concerns by labor unions in terms of job security, and that strategy makes sense to me,” the executive said on condition of anonymity.
At the time of Ford's 2019 commitment to invest $900 million in the Ohio assembly plant at Avon Lake, it promised to create more than 1,500 jobs. Plus, Ohio is home to several plants, which means the state is quite proven and stable in terms of relevant infrastructure such as electricity and water supply.
Texas is also viewed as a possible candidate site given its aggressiveness to win foreign investors by offering a wider range of administrative and financial incentives. Texas hosts large companies such as Samsung Electronics, GM, Tesla and Toyota. As the state has an ample supply of experienced and skilled workers, the regional government is aiming to attract eco-friendly companies and those involved in similar business models.
“Because of attractive tax benefits and proximity to Mexico, Texas is also cited as an attractive site for the BlueOvalSK headquarters,” another industry executive said by telephone.
Ford said that by 2030, it was expecting annual energy demand for its vehicles to rise to 140 gigawatt-hours (GWh) in North America and up to 240 GWh globally. Specifically, it hopes to catch up with its core rivals, including Tesla and GM, both of which are on track to localize their battery development in the United States.