Ford and SK On Divorce: What the US EV Battery JV Breakup Means for Global Supply Chains

Is the North American EV gold rush cooling off, or are manufacturers simply cleaning house? The shocking dissolution of the massive $11.4 billion US EV battery joint venture between Ford Motor Company and South Korean giant SK On sends ripples of uncertainty across the Western automotive landscape. This move signals a major strategic pivot, one that Western investors and buyers can no longer afford to ignore.

Announced on December 11th, the breakup of the BlueOval SK partnership—a collaboration established in 2022 to secure domestic battery supply—will see the partners split custody of the three planned gigafactories. This strategic realignment is driven by the volatile reality of slowing electric vehicle demand in the U.S. and the expiration of key federal incentives.

H2: The Unraveling of BlueOval SK: A Tale of Two Factories

The end of this major partnership effectively reshapes the footprint of domestic battery manufacturing in the US. The core of the agreement is a straight asset division, allowing both giants to pursue independent, leaner strategies:

• Ford Takes Control of Kentucky: A Ford subsidiary will assume full ownership of the two battery plants located in Kentucky. One of these facilities had already begun initial operations, intended to supply cells for models like the F-150 Lightning.
• SK On Takes Tennessee: SK On will gain full control and operational rights over the Tennessee plant, which is co-located with Ford’s BlueOval City assembly site.

Ford, for its part, has offered little comment beyond acknowledging SK On’s disclosure, emphasizing its continued commitment to its EV strategy, albeit with a newly focused battery supply structure.

H2: The Real Driver: EV Market Turbulence and SK On’s Pivot

For industry experts, the split was less a surprise and more an inevitable consequence of the market cooling faster than anticipated. Ford CEO Jim Farley himself had projected a potential 50% drop in EV sales following the end of the $7,500 tax credit on September 30th.

H3: Financial Strain and the ESS Lifeline

The underlying pressure on the Korean battery maker is clear. SK On posted a significant Q3 operating loss of 124.8 billion won ($84.72 million), nearly double the prior quarter’s loss, attributed directly to slowing EV battery shipments. The JV’s termination is explicitly aimed at improving the company’s financial health:

• Sharply reducing debt and cutting fixed costs associated with the joint venture structure.
• Accelerating expansion into the Energy Storage System (ESS) market, a sector seeing surging demand for storing renewable energy. SK On has already secured deals to supply LFP batteries for ESS projects in North America.

This pivot echoes moves by other Korean giants, LG Energy Solution and Samsung SDI, who are also reportedly repurposing EV production lines for the ESS sector.

H2: Geopolitical and Investment Ramifications for the West

This restructuring has significant implications beyond the two companies involved. The BlueOval SK project was a flagship of American domestic manufacturing, having secured a conditional loan commitment of up to $9.2 billion from the U.S. Department of Energy.

Expert Analysis for Western Stakeholders:

1. Supply Chain Localization at Risk: While the physical assets remain in the US, the dissolved partnership complicates the narrative of securing an entirely domestic, stable supply chain. The fate of the substantial federal loan money tied to the JV is now a key point of regulatory scrutiny.
2. Flexibility Over Exclusivity: SK On’s decision highlights a lesson for OEMs: relying on a single, captive supplier structure is risky when EV demand projections falter. They are prioritizing agility to serve multiple clients and sectors, including the booming ESS market.
3. The Hybrid Hedge: Ford’s move appears to support their recently adjusted strategy, which places a heavier, immediate focus on hybrid electric vehicles (HEVs) over pure Battery Electric Vehicles (BEVs) in the short-to-medium term.

For Western automakers, this is a stark reminder that the ‘battery race’ is not just about volume, but about financial sustainability and strategic optionality. See our analysis on Ford’s evolving electrification roadmap for more context on where the company is shifting its capital.

H2: Recommended Reading for Auto Analysts

The transition is expected to be finalized by the end of Q1 2026, pending regulatory approvals. Stakeholders must watch how swiftly SK On pivots the Tennessee plant toward ESS and how Ford integrates the Kentucky capacity into its immediate EV production pipeline.

Sources for this report include filings covered by Reuters, as well as industry analysis from Electrek and EVXL.