EV Battery Manufacturing Restructuring and Strategic Repurposing: Assessing the Financial and Operational Implications of Ford and SK On's Dissolution

The dissolution of Ford and SK On's $11 billion joint venture, BlueOval SK, marks a pivotal moment in the evolving landscape of electric vehicle (EV) battery manufacturing. As the automotive industry grapples with slower-than-expected EV adoption and shifting consumer preferences, the strategic realignment of Ford and SK On underscores the financial and operational challenges inherent in scaling battery production. This analysis examines the implications of their split, the repurposing of facilities, and the broader lessons for investors navigating the EV transition.

Financial Implications: Restructuring and Risk Mitigation

The dissolution of BlueOval SK reflects a recalibration of capital allocation for both companies. Ford reported a $5.1 billion loss in its EV division in 2024 and anticipates a similar loss in 2025. The company has shifted focus toward internal combustion engine (ICE) vehicles, including a $60 million investment to expand F-Series production, while also pursuing cost-effective lithium iron phosphate (LFP) battery technology for its upcoming midsize electric pickup.

For SK On, the split is a strategic move to reduce debt and fixed costs. According to reports, the company lacks viable LFP technology for automotive use. The company is pivoting toward energy storage systems (ESS) and partnerships with other automakers, including Hyundai, Kia, and Volkswagen. According to a report by Bloomberg, SK On and Ford have agreed to reduce their joint venture's capital by 4.9 trillion won to return funds to shareholders, signaling a financial restructuring aimed at optimizing balance sheets.

Operational Adjustments: Facility Repurposing and Supply Chain Reallocation

Operationally, the dissolution has led to a reassignment of BlueOval SK's three U.S. battery plants. SK On will assume full control of the Tennessee facility, which it plans to repurpose for ESS production, while Ford retains ownership of the two Kentucky plants. This division allows Ford to maintain a domestic battery supply chain while avoiding the complexities of SK On's LFP technology gap.

Ford's retained Kentucky facilities are being repositioned to serve a broader customer base. The BlueOval SK Battery Park, which began production in August 2025, is now exploring partnerships with energy storage firms and other automakers to utilize excess capacity. Meanwhile, Ford's $2 billion investment in the Louisville Assembly Plant will focus on a midsize electric pickup, leveraging LFP batteries produced at a Michigan factory. This shift aligns with Ford's CEO Jim Farley's vision of a "Model T moment" in EV manufacturing, emphasizing affordability and scalability.

Strategic Repurposing: Energy Storage and New Partnerships

SK On's pivot to ESS is gaining momentum. The company has secured a 7.2 GWh battery storage supply deal with Flatiron Energy, with deliveries starting in late 2026. To meet this demand, SK On is repurposing EV battery production lines in Georgia and planning LFP production in South Korea. This move not only diversifies SK On's revenue streams but also positions it to capitalize on the growing U.S. energy storage market.

Ford, meanwhile, is leveraging its retained Kentucky facilities to strengthen its domestic supply chain. The company's Universal EV Platform and "assembly tree" production model aim to reduce costs by 20% in parts and 40% in workstations. By focusing on LFP batteries, Ford is addressing cost concerns while maintaining flexibility to adapt to market demands.

Conclusion: Lessons for Investors

The Ford-SK On dissolution highlights the volatility of the EV market and the importance of strategic agility. For Ford, the shift to ICE and LFP technology reflects a pragmatic approach to profitability amid uncertain demand. For SK On, the pivot to ESS and partnerships with other automakers demonstrates a commitment to long-term growth in a competitive landscape. Investors should monitor how these companies navigate regulatory shifts, supply chain disruptions, and evolving consumer preferences. The repurposing of BlueOval SK's facilities and the emergence of new partnerships underscore the need for flexibility in capital allocation and technological innovation.