Korean battery makers slow down overseas expansion

LG Energy Solution's (LGES) factory in the U.S. state of Michigan / Courtesy of LGES

The deceleration in global demand for electric vehicles (EVs) is putting the brakes on Korean battery makers’ plans to build manufacturing facilities overseas, according to industry officials, Sunday.

LG Energy Solution (LGES) said Saturday that Turkey’s Koc Holding announced the dissolution of the memorandum of understanding (MOU) signed in February by the two companies and America’s Ford Motor to build a battery plant near the Turkish capital of Ankara. Ford and Koc, which have jointly produced commercial vehicles for the European market, failed to establish a joint venture with SK On last year, so LGES was chosen as an alternative.

“After thoughtful discussions, the three parties have mutually agreed that due to the current pace of consumer electrification adoption, now is not the appropriate time to continue with the investment into a battery cell production facility in Turkey, intended for future commercial EVs,” LGES said in a statement.

It added that its plan to produce batteries for Ford’s commercial EVs remains on track, as the products will be produced at existing facilities.

“LGES remains committed to collaborating on Ford’s ambition to offer an electric portfolio of vehicles across Europe by 2035,” the Korean firm said.

The company’s announcement is interpreted as proof of sluggish demand for EVs in Europe.

Amid the economic downturn, European consumers have been reluctant to buy EVs which are more expensive than internal combustion engine vehicles. Earlier this month, Volkswagen announced that it would delay the construction of its fourth battery plant, citing sluggish EV demand in Europe.

Although demand for EVs in North America was once expected to remain solid, realignments of investment plans are also visible in the U.S. market.

An electric vehicle battery plant of BlueOval SK, a joint venture between SK On and Ford Motor, is under construction in the U.S. state of Kentucky in this January file photo. Courtesy of SK On

SK On and Ford are considering postponing the operation of their joint battery plant in Kentucky, which was initially supposed to start in 2026. This came as Ford decided to postpone $12 billion worth of investment into EVs.

“To meet demand and ensure our success, BlueOval SK Battery Park in Kentucky will postpone production at its second plant, known as Kentucky 2,” said Ursula Madden, external affairs director of BlueOval SK, a joint venture between SK On and Ford. “Our ultimate goals have not changed, but the time to reach those goals has been revised.”

When SK On temporarily stopped the expansion of its factory in Seosan, South Chungcheong Province, last week, there was speculation that the battery maker may slow down its investment in the Korean market as well, in line with the possible decrease in Hyundai Motor’s EV production.

The SK Group’s battery manufacturing unit, however, denied the speculation, saying that it had suspended the construction to wait for the board’s decision on construction costs.

“Following the board’s decision, we resumed construction on Saturday,” the company said.