Ford Motor Company and Seoul, South Korea-based SK Innovation signed a memorandum of understanding to establish a joint venture to domestically manufacture batteries for electric vehicles, the two companies said Thursday. The new venture, dubbed BlueOvalSK, will produce around 60 GWh annually starting mid-decade. The MOU is the latest sign that Ford intends to vertically develop its battery capabilities.
“Initially with just a Mustang Mach-E, we felt like it was most efficient for us to purchase the batteries from the supply base, but as we start to move up that adoption curve, and move from just the early adopters to the early majority [. . .] we now have sufficient volume to justify this level of investment and this is why we’re pursuing this partnership,” Ford’s chief product platform and operations officer Hau Thai-Tang said Thursday.
Ownership structures will be worked out in the future, Lisa Drake, Ford’s chief operating officer, told reporters Thursday. The 60 GWh production capacity would likely span two manufacturing sites but the companies are still determining those plans, including locations of the plants across North America, Drake added. Sixty GWh roughly translates to enough battery capacity to build 600,000 vehicles, Thai-Tang said.
Ford has taken strides in recent months to build a vertically integrated capability to manufacture battery cells at scale. In April the Dearborn, Michigan-based automaker said it would open a battery technology development center in Michigan. It also led, with BMW, a $130 million investment into solid-state battery developer Solid Power’s Series B round.
But Ford has not always been so bullish on making batteries in-house. “Our product plans changed dramatically,” Thai-Tang said.
The news comes less than 24 hours after Ford debuted its F-150 Lighting, the electric version of its iconic nameplate vehicle and the best-selling truck in America. The Lighting is one of three EVs that Ford has debuted in the past year and will be a cornerstone of the company’s plans to invest $22 billion in EVs through 2025.
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SK Innovation already has two separate EV battery plants under construction in Georgia under a collective investment of $2.6 billion. One of the plants is already producing batteries and the other is set to become operational in 2023. The company is also building a separate factory in Tennessee, with Volkswagen AG as its customer. Ford and SK Innovation’s relationship spans many years, with the automaker selecting SK as its battery supplier for the Lightning in 2018.
The company recently completed a $1.8 billion settlement in April over trade secret disputes with rival LG Energy Solutions. The resolution came after a two-year dispute that nearly led to SK Innovation shutting down its Georgia plans.
The two Korean conglomerates have invested billions in American battery manufacturing alongside their automaker partners. LG Energy is building manufacturing facilities in Ohio and Tennessee under its joint venture with General Motors, Ultium Cells LLC.
“The scale just makes sense now,” Drake said. “It’s the perfect time to start to do this.”