US DOE trims $9.6B loan as Ford, SK On end EV battery partnership

On the Dash:

• DOE will cut the $9.6B loan to Ford and SK Innovation following the breakup of their EV battery joint venture.
• SK On will take control of the Tennessee plant, and Ford will assume both Kentucky plants, with operations shifting independently.
• The breakup highlights ongoing challenges in U.S. EV production amid policy changes, slow EV adoption, and industry losses.

The U.S. Department of Energy will reduce a loan of up to $9.6 billion to Ford Motor Co. and South Korea’s SK Innovation after the companies announced they will dissolve their joint electric vehicle battery venture. The loan, originally finalized under the previous administration to fund plants in Tennessee and Kentucky, will be restructured to reduce taxpayer exposure and accelerate repayment. Ford is cooperating voluntarily to accelerate repayment.

The split ends the BlueOval SK partnership, formed in 2022 to expand domestic EV battery production with an investment of over $11 billion for three factories and an assembly plant for electric F-Series pickups. SK Innovation’s battery unit, SK On, will take full ownership of the Tennessee plant, which has yet to begin producing cells. Ford will assume control of the two Kentucky plants, one of which is currently operational.

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The move represents a setback for both companies as they navigate slow EV adoption and financial losses in the sector. Ford reported a $5.1 billion pre-tax loss in its EV business in 2024 and warned that its deficit may widen in 2025. The dissolution reflects broader challenges in scaling domestic EV production amid shifting U.S. policies. President Donald Trump has eliminated EV purchase incentives and eased fuel-economy and emissions standards, making the transition away from combustion engines more complex.

SK On intends to maintain a strategic partnership with Ford centered on the Tennessee plant, while restructuring its operations to improve productivity and operational flexibility. The breakup allows each company to manage its factories independently, potentially enhancing financial control and market responsiveness.

The loan restructuring, combined with the JV breakup, highlights the risks and costs of building a domestic EV battery supply chain as they balance federal support, market demand, and operational challenges in the EV sector.