SK On, Ford and Koç Sign MOU to Create Battery Production Joint Venture in Turkey

SK On is moving forward with its ambitious dream of becoming the global No. 1 supplier in the electric vehicle (EV) battery market. Joining hands with Ford, the Korean battery supplier began building the largest battery joint venture in the U.S. last year. In 2022, Koç, a leading investment holding company in Turkey, joined the SK On-Ford battery alliance and plans to set up a joint venture to produce batteries in Turkey. The battery alliance formed in the U.S. has been developed to include Europe, which is another large global market.

On March 14, SK On announced that it signed an MOU with Ford and Koç to create a joint venture for EV battery production. Koç Holding is a leading Turkish company founded in 1926 and is the only one in Turkey on Fortune Global 500. By creating Ford Otosan in 1959 with Ford, the Turkish company has been manufacturing commercial vehicles (including business vans) in Kocaeli and others. Its annual capacity is 455,000 units.

The new battery plant will be located near Ankara, Turkey. The plant will produce high-nickel NCM (nickel, cobalt, manganese) battery and the production with an annual capacity of 30-45 GWh will begin as early as 2025. These batteries will be supplied to power mostly commercial vehicles. SK On is the first among the three leading Korean battery suppliers to work with an automaker and create a joint venture for large scale production in Europe.

SK On has established itself as a key partner and battery supplier to Ford. Especially, Ford recently said it will separate its electric vehicle business from its autos operations, accelerating its electrification plan, which heightens expectations for its cooperation with SK On.

Ford plans to have 240 GWh of global battery capacity by 2030 and a fair amount of it will come from SK On. Ford will source 140 GWh needed in North America from “BlueOvalSK,” the joint venture it will form with SK On with plants in Tennessee and Kentucky, that has annual capacity of 129 GWh, and 11 GWh from SK On’s second plant in Georgia.

The remaining 100 GWh will be sourced from Europe and China with 30-45 GWh coming from the new plant of the joint venture between SK On and Koç, which amounts to in total more than 70 percent (170-185GWh) of Ford’s planned global capacity of 240 GWh.

SK On is speeding up establishment of global production bases not only by creating joint ventures with external partners but also by building its own plants. The company is operating plants in Korea (Seosan), the U.S. (Georgia), China (Changzhou and more) and Hungary (Komarom). Its second plant in Yancheng, China and its plant in Ivancsa, Hungary will begin their operation before 2025.

SK On aims at growing into a true global battery supplier with total capacity, coming from the joint ventures and its own production bases, of 220 GWh and 500 GWh by 2025 and 2030, respectively. “SK On won cumulative orders of 1,600 GWh at the end of 2021 and is receiving increased orders from its customers,” Jee Dong-seob, CEO of SK On, said in a recent interview with an internal channel.

The joint venture with Turkey is expected to grow Ford’s presence in Europe as well as in the U.S. Ford was named as the No. 1 commercial vehicle brand across Europe for the 7th consecutive year in 2021. Ford Transit Custom became the best-selling total vehicle in the U.K. with 40,000 units sold in 2020.

“This proposed new battery joint venture is a prime example of how we are leveraging strategic partnerships to strengthen our business,” Stuart Rowley, chairman of Ford of Europe, said. He continued, “It is also the first in a number of significant electrification and commercial vehicle announcements we will make this year as part of the ongoing redesign of our operations to create a leaner, stronger and sustainable all-electric Ford business in Europe.”

Koç Group, another partner in the alliance, operates in a number of key sectors including energy, automotive, finance and consumer durables and has considerable influence on the Turkish market, which makes it the best joint venture partner in Europe. It employs about 110,000 people and recorded 346.7 billion lira in consolidated revenue in 2021.

Levent Çakıroğlu, CEO of Koç, said, “Today, we are very excited to announce the signing of a non-binding MOU to look at a possible joint venture as a significant step for vertical integration in the electrified future of the auto industry.” “This strategic move is not only a testament to Turkey’s potential, but also brings our country a significant global competitive edge in battery production,” he added. He continued, “The long-standing history and domestic leadership position of Koç Group in the auto industry, the trust and commitment of our partner Ford, and the deep-rooted experience of SK Innovation, further solidify our confidence in this project.”

SK Innovation (the mother company of SK On) began its battery research in 1991 and has been recognized as the best company in high-nickel NCM battery technology, which has the biggest impact on EVs’ driving range and power. The energy company developed NCM811, a type of battery using an 8:1:1 ratio of nickel, cobalt and manganese, for the first time in the world in 2016. SK Innovation also successfully developed NCM9 batteries (that contain 90% nickel) which will be supplied to power Ford’s F-150 Lightning.

“It is our great pleasure that SK On cooperates with Ford through BlueOvalSK, the battery joint venture, as well as that we found the new partnership in Europe,” Jee said, adding, “We will achieve successful joint ventures with great partners in Europe as well as in the United States.” He continued, “I hope this extended partnership will contribute to Ford’s electrification strategy and by extension, to the growth of the EV industry and global carbon emission reduction.”

SK On, Ford and Koç expect their battery joint ventures to provide benefits for commercial vehicle operators across Europe such as a saving in energy and operation.

Stuart Rowley said, “I want to thank our partners SK On and Koç Holding for their vision in what I believe will be an industry-leading joint venture which will take the manufacture and supply of batteries for electric commercial vehicles to the next level.” He added, “I also thank the Turkish Government for continuing to support our electrification transformation.”