SK on considers withdrawing its decision on EV battery venture in Turkey

[Source : SK on]

SK on Co. may consider withdrawing a joint venture to make electric car batteries with U.S. carmaker Ford Motor Co. and largest Turkish company Koc Holding as the global economic recession and financial crisis continue.

“We have been negotiating a joint venture in Turkey after signing a memorandum of understanding (MOU) in March last year, but talks are still ongoing without much progress,” a SK on official said. “But it’s still undecided whether the talks will continue or not.”

SK on had signed a three-way MOU with Ford and Koc to set up a electric car battery plant in Turkey in March last year.

The plan was to commercially produce EV batteries at a new factory to be built in Ankara, the capital city of Turkey, with an annual capacity of 30 gigawatt hour to 45 GWh from 2025. The three companies’ investment was estimated at 3 trillion won ($2.39 billion) to 4 trillion won.

Although they have discussed details about the plan, they have not shown much progress.

It seems the worsening economic downturn and high interest rates have greatly shaken the global capital market.

Cost of running electric cars have increased significantly due to electricity fee hikes across Europe following the Russian-Ukraine war, which added to the negative market sentiment, according to sources.

Other South Korean battery manufacturers are also being cautious. LG Energy Solution Ltd. is reconsidering its earlier decision to invest 1.7 trillion won in building a car battery plant in Arizona.

These changes in steps come as inflation and rising foreign exchange rates are expected to drive up costs.

“Many predict that the electric car market growth is likely to slow as the global economy sinks toward recession,” according to a source from the battery industry. “It seems car battery manufacturers are set to focus on their own competency instead of going for external expansion.”