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(Bloomberg) — SK Innovation Co. said the termination of a battery joint venture with Ford Motor Co. in the US resulted in a 3.7 trillion won ($2.6 billion) asset loss, as the cost of a pullback in global electric vehicle ambitions ripples through the supply chain.
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The companies said last month they’re ending their BlueOval project, just four years after unveiling the $11 billion initiative to build three battery factories and an assembly plant for electric pickup trucks in the US.
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Ford will take over the joint venture’s two plants in Kentucky, while SK Innovation’s battery unit SK On will operate the Tennessee site. The latter is set to begin production of storage cells and batteries for Ford’s extended-range EVs in 2028, Ahn Kun, head of planning and coordination at SK On, said Wednesday.
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The loss represents a one-time impairment, according to Kim Youngkwang, SK On’s head of financial management. Ford will take over both the assets and liabilities of the Kentucky operation, eliminating about 5.4 trillion won in debt and improving SK’s financial structure, he said during an earnings call on Wednesday.
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SK Innovation shares fell as much as 4.5% on Wednesday, before trading about 3% lower.
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South Korea’s battery sector is reeling from an unraveling of the EV transition in key markets like the US, where President Donald Trump has eliminated purchase subsidies and is hollowing out fuel economy and emissions standards. Earlier this month, SK’s rival LG Energy Solution Ltd. reported a surprise preliminary loss on the gloomier outlook as major Western automakers overhaul their electrification plans.
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SK Innovation said the end of the US federal tax credit for EV buyers ate into its profitability in the fourth quarter despite increased shipments to Europe. Operating profit was 294.8 billion won for the three months ended Dec. 31, falling short of analyst estimates of 370 billion won. SK On’s operating loss widened to 441.4 billion won from 124.8 billion from a year earlier.
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SK On will continue to face challenges this year given the grim outlook for the US EV market and the fact the sector accounts for a higher portion of its business compared with other Korean battery makers, Shinyoung Securities analyst HongJu Shin said in a note.
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Despite the short-term headwinds, SK’s Ahn said demand for EV batteries is expected to gradually recover this year and be similar to last year’s levels.
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Still, the company is pivoting its production lines and working to beef up its energy storage systems business, with a goal of winning orders totaling 20 gigawatt hours this year.
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It’s also in talks with multiple companies for potential supply deals in areas including logistics, multipurpose unmanned vehicles, electric ships and drones, while developing new markets like humanoid robots, Kim said.
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