Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Korean battery makers to battle it out in US by forming joint ventures
SK, Ford agree to set up 'BlueOvalSK'
By Kim Bo-eun
LG and SK's corporate images / Korea Times file
By Kim Bo-eun
SK Innovation (SKI) is seeking to challenge LG Energy Solution (LGES) in the U.S. electric vehicle (EV) battery market by forging a partnership with Ford, the second-largest automaker there in terms of market share. LG is already in the process of building a battery production plant in a joint venture with the top-ranked GM.
Automobile manufacturers are currently rushing to build alliances with battery makers to secure a stable supply as the U.S. market for EVs is projected to grow exponentially.
SKI and Ford signed an agreement Thursday to set up BlueOvalSK, a joint venture that will construct an EV batteries plant at a cost of 6 trillion won. Once completed, the facility will be able to produce battery cells and modules with an annual aggregate output of 60 gigawatt-hours. The companies are aiming to launch operations at the factory by 2025.
“The joint venture will go beyond just collaboration between SK and Ford and play a key role in establishing and fostering the EV value chain that the U.S. government is pushing for,” SKI CEO Kim Jun was cited as saying in a press release.
“This MOU is just the start; it's a key part of our plan to vertically integrate key capabilities that will differentiate Ford far into the future,” Ford CEO Jim Farley said.
SKI is currently building two plants in the U.S. state of Georgia. The construction of its first factory is almost finished with production scheduled to start later this year. The second plant, which is 20-percent complete, is slated to start production in 2023. The two are set to have 21.5 gigawatt hours of production capacity. SK is seeking to add two more plants in the U.S.
Last month, SKI settled a years-long legal dispute with LG's battery affiliate over the misappropriation of trade secrets. SK is a late entrant into the market for EV batteries, but is stepping up investments to capture opportunities in the fast-growing U.S. market.
President Moon Jae-in is set to visit SKI's Georgia plants on the way back to Korea after his summit with U.S. President Joe Biden. SK Chairman Chey Tae-won ― in the U.S. as part of President Moon's delegation ― is set to accompany him on the visit Saturday. LGES CEO Kim Jong-hyun is also visiting the U.S. as a member of the delegation.
The establishment of the SK-Ford joint venture comes as LGES ramps up production in America. LGES formed an alliance with GM and set up a joint venture ― Ultium Cells ― which is building a manufacturing plant in Tennessee, in addition to one in Ohio. LG is separately investing 5 trillion won into a U.S. plant it will run independently. The battery maker already has a cell factory in the state of Michigan, and will soon announce candidate sites for the new facility.
Meanwhile, Samsung SDI is taking things at a slower pace with no tie-ups so far.
Given the projected growth of the U.S. EV market, battery makers forecast a supply shortage, which would enable companies not involved in joint ventures, such as Samsung SDI, to boost their market share.
“A joint venture would enable a stable battery supply ecosystem that benefits both carmakers and battery firms. But carmakers will still have to opt for a multi-vendor system to hedge against risks, such as possible technology leaks,” an industry official said.
SKI's stock was unaffected by the news of the joint venture with Ford, closing flat Thursday after ending at 278,000 won Tuesday.