Sometimes a partnership sounds great on paper until reality shows up with a different set of plans. Ford Motor Co. (F) and South Korean battery manufacturer SK On are calling it quits on their ambitious EV battery venture, unwinding a joint operation that had consumed $11.4 billion and represented a big bet on America's electric future.
The Breakup Details
SK On, a subsidiary of SK Innovation, announced it's ending the EV battery partnership at two U.S. plants to shift its focus toward Energy Storage Systems instead. The divorce settlement looks fairly straightforward: Ford gets full ownership of the Kentucky plant, while SK On takes control of the Tennessee facility.
According to SK On, "The production start schedule for the Tennessee plant remains flexible at this time, as it is related to the ownership transition." That's corporate speak for "we're still figuring this out."
The move comes as SK On attempts to overhaul its strategy, reduce debt, and improve profitability after reporting multi-million dollar losses recently. When your business model depends on surging EV demand and that demand starts sliding backward, adjustments become necessary.
The joint venture, called BlueOval SK, had already started producing batteries at the $5 billion Kentucky plant. The first batteries rolled off the line destined for the F-150 Lightning EV pickup truck. But here's the awkward part: Ford's EV sales crashed 60% in November, raising serious questions about whether the Lightning itself has much of a future.
Trump Administration Changes the Game
The timing isn't coincidental. President Donald Trump recently rolled back Corporate Average Fuel Economy (CAFE) Standards, with Transportation Secretary Sean Duffy taking aim at what he called a "backdoor EV mandate" pushed by the previous Biden administration and former Transportation Secretary Pete Buttigieg.
Ford CEO Jim Farley applauded Trump's decision, which tracks with his earlier prediction that EV adoption in the U.S. would reach just 5%. That's a far cry from the bullish projections that justified building massive battery plants in the first place.
But Farley has also sent mixed signals. Despite the regulatory headwinds and disappointing sales numbers, he's reaffirmed Ford's commitment to electric vehicles, emphasizing that the company can't afford to surrender ground to Chinese automakers in the EV race. "We can't walk away from EVs, not just for the US, but if we want to be a global company," Farley said.
So Ford finds itself in an interesting position: simultaneously cheering regulatory relief from EV mandates while insisting it remains committed to the technology. Welcome to the complicated reality of being a legacy automaker trying to navigate the energy transition.
Price Action: Ford shares declined 0.30% to $13.37 during pre-market trading, according to market data.