SK On Company is considering withdrawing from an agreement to build an electric vehicle (EV) battery factory in Turkey in a deal with Ford due to deteriorating financing conditions, reports out of South Korea over the weekend.
Last March, the South Korean company signed a tentative agreement to jointly invest $3.2 billion with Ford and Turkey’s Koc Holding in a Turkish plant to supply Europe, but is now said to be considering exiting the deal amid rising interest rates The war in Ukraine posed an additional risk to the growth of demand for electric vehicles in Europe.
SK On has a joint venture with Ford called BlueOval SK, which is currently building two electric vehicle battery factories in the US, and another joint venture with Hyundai Motor, which plans to build a battery factory in Georgia. It also has battery factories in Hungary, China and South Korea. The Turkish plant near Ankara should be operational in 2025 with a capacity of up to 45 gigawatt hours (GWh) per year.
According to local reports, SK On raised KRW 2.8 trillion (US$2.25 billion) through a rights issue in December, but this was far less than the previously targeted KRW 4 trillion as some private equity firms scaled back their funding plans backed with great fears of rising interest rates Energy costs in Europe could potentially slow demand for electric vehicles in Europe.