Glendale, Kentucky -- A battery joint venture between South Korea’s SK On Co. and Ford Motor Co. is likely to raise about $4 billion in a US green energy lending program to fund its $11.4 billion investment in the US, according to people with knowledge of the matter on Sunday.
The two parties' 50:50 venture BlueOval SK (BOSK) is in talks with the US government to take out a low-interest loan in March through the Advanced Technology Vehicles Manufacturing Loan Program (ATVM).
The planned debt financing is expected to speed up the construction of its two battery plants in Glendale, Kentucky and another one in Tennessee.
Asked about the funding plan, an SK On official said: “We are in negotiations with the US government. Nothing has been determined.”
SK and Ford broke ground for two battery plants in Kentucky last month.
The ATVM was launched in 2007 by the US Department of Energy to provide direct loans to US manufacturers of fuel-efficient vehicles. They are offered at an interest rate as low as that of US Treasury yields.
The loan, if secured, is greater than the $2.5 billion raised through the ATVM by Ultium Cells at the end of last year. The JV between LG Energy Solution Co. and General Motors Co. took out the loan at an interest rate of 3.6% a year.
The $2.5 billion loan will finance the construction of Ultium Cells' three new EV battery manufacturing facilities in Ohio, Tennessee and Michigan.
The financing plan for SK-Ford’s US facilities comes after both companies withdrew a preliminary agreement to build a 4 trillion won ($3.2 billion) battery factory in Turkey. Funding difficulties were cited as key to the deal's collapse.
Last year, SK cut the funding size from the planned 4 trillion won for capital expenditures to 2.8 trillion won after some global private equity firms pulled back.
The Kentucky plants will produce batteries to be equipped in 820,000 units of Ford’s F-150 Lightening pickup trucks a year.
They will be completed by 2025 and 2026, respectively, with a combined production capacity of 86 gigawatt-hours (GWh) a year. That will make them the single largest production base for an EV battery supplier.
By 2025, SK On will expand its battery production capacity in the US to 180 GWh to join the ranks of the global top three battery makers. Currently, it ranks fifth.
Meanwhile, Ford is in talks with LG Energy Solution to build a cell factory in Turkey, switching from SK.
Write to Ik-hwan Kim at lovepen@hankyung.com
Yeonhee Kim edited this article.
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