November 28, 2024

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The logos of Ford, LG Energy Solution and SK On (provided by each company)

American carmaker Ford has selected LG Energy Solution as a new partner to build an electric vehicle battery plant in Turkey, scrapping its previous deal with SK On for the battery manufacturing project, according to industry sources here Tuesday.

One source on condition of anonymity told The Korea Herald that the reason Ford decided to part ways with SK On was likely due to the battery maker’s relatively low yield rate.

“SK On’s battery yield rate is estimated at a maximum of about 80 percent, whereas other Korean battery makers such as LG Energy Solution and Samsung SDI put up over 90 percent yield rates,” the source said. A 90 percent battery yield rate means 9 out of 10 newly produced batteries get the green light to be sold in the market.

“Global automakers are setting up joint ventures to have a stable supply of EV batteries, but since SK On’s yield rate was not enough for Ford to push ahead with the plan, they probably had to look for an alternative,” he added.

SK On denied such a view, claiming that the yield rate was not a reason behind lagging discussions with Ford.

"The talks have not been making much progress, but are not terminated. As for the negotiations (with Ford) not moving forward, some conditions were not met including the battery prices," said an official at SK On.

Bloomberg also reported earlier that LG Energy Solution and Ford plan to sign a memorandum of understanding in late January or early February after the US carmaker dropped the deal with SK On, citing anonymous sources with knowledge of the matter.

An official at LG Energy Solution told The Korea Herald that nothing had been confirmed at the moment in regard to teaming up with Ford to build a joint venture for an EV battery plant in Turkey.

LG Energy Solution has been supplying batteries for Ford's Mustang Mach-E and E-Transit since the second half of 2020.

In March last year, SK On signed a deal worth up to 4 trillion won ($3.2 billion) with Ford and Turkey-based Koc Holdings to build an EV battery plant with an annual production capacity of 30-45 gigawatt-hours near Ankara, the capital city. The plant was slated to begin operation as early as 2025.

Despite the Turkey partnership losing its steam, SK On and Ford have not made any changes to their other projects including setting up two battery manufacturing sites in the US.

BlueOval SK, a joint venture between SK On and Ford, broke ground to build the single largest EV plant in the US in Kentucky in December. The mega-manufacturing site will have a total production capacity of 86 GWh with a goal to begin operations in the first quarter of 2025.

According to market analysis SNE Research, SK On’s market share in the global EV battery industry was measured at 5.9 percent in the January to November period in 2022. LG Energy Solution took up 12.3 percent of the market in the same timeline.

By Kan Hyeong-woo (hwkan@heraldcorp.com)