Back in 2021, Ford’s future looked decidedly electric. Flush with optimism and buoyed by generous federal incentives, the Blue Oval teamed up with South Korean battery heavyweight SK On for an $11.4 billion joint venture to build a network of EV battery plants across the United States. It was a bold, expensive, and very public declaration that Ford intended to be a serious player in the EV arms race.

Fast-forward to late 2025, and that confidence has given way to retrenchment. Ford and SK On are dissolving their battery partnership entirely, a high-profile breakup that says less about either company’s competence and more about how quickly the EV landscape has shifted under Detroit’s feet.

The split didn’t come out of nowhere. Two major forces have been working against EV momentum in the U.S. First was the rollback of the federal EV tax credit, a move that immediately cooled consumer demand and took some of the financial sting out of sticking with internal combustion. Second came the U.S. administration’s decision to revise fuel economy standards, a policy change that effectively tilts the playing field back toward gasoline-powered vehicles. Together, those moves reshaped the market in a way few automakers had modeled just a few years ago.

Under the terms of the breakup, the assets will be divided rather than abandoned. SK On will take over the already-established joint venture facility in Tennessee, known as the BlueOval plant, while Ford will assume control of the two adjacent factories in Kentucky. The arrangement keeps both companies in the battery business, just no longer under the same corporate roof.

Notably, it was SK On that formally dissolved the partnership, though the company has been careful to emphasize that it still plans to work with Ford around the Tennessee facility. From SK On’s perspective, the separation is about agility. Ending the joint venture, the company says, will improve productivity, increase operational flexibility, and allow it to accelerate its North American energy storage system business—an area that’s quietly becoming just as important as EVs themselves.

The fallout extends beyond factory gates. One of the most immediate consequences is a reassessment of a massive government loan approved near the end of the Biden administration. Originally structured as up to $9.6 billion in financing for the joint venture, the loan is now set to be reduced under the Trump administration’s oversight. How much smaller it will become hasn’t been finalized, but Bloomberg reports that the loan will be reworked to “reduce exposure to taxpayers and ensure its prompt repayment.”

Ford, for its part, is cooperating with the Energy Department and has signaled it’s willing to repay the loan faster than originally planned—a move that suggests the company is eager to clean up its balance sheet and put some distance between itself and a bet that no longer looks like a sure thing.

That urgency is understandable. Ford’s EV business has been bleeding red ink, losing $5.1 billion before interest and taxes in 2024, with even steeper losses expected this year. Domestic EV sales are sliding, and CEO Jim Farley has been unusually blunt about what lies ahead. He recently warned that, under current policies, EV sales in the U.S. could fall by as much as 50 percent.

From that vantage point, the breakup looks less like a failure and more like triage. “We believe the writing was on the wall this partnership was not going to work moving forward,” Wedbush Securities managing director Dan Ives told the Detroit Free Press. “Ford has to make some difficult moves and this was a smart strategic one to rip the band-aid off. The EV market is dramatically scaled down for Ford now and they have to adjust accordingly.”

That adjustment doesn’t mean Ford is abandoning electrification altogether. Instead, it signals a recalibration—one that prioritizes flexibility over massive, long-term capital commitments made under very different political and economic assumptions. The automaker still needs batteries, still needs EVs, and still needs a credible electrified lineup to compete globally. What it no longer seems willing to do is bet tens of billions on a single vision of how fast America would go electric.

For SK On, the breakup may actually be an opportunity. With full control of the Tennessee plant and freedom to pursue energy storage more aggressively, the company can diversify beyond passenger EVs and chase steadier demand from grid-scale projects and industrial customers.

In the end, the Ford–SK On split is less about blame and more about timing. The EV boom that automakers planned for in the early 2020s hasn’t vanished, but it has slowed, fractured, and become far more politically contingent. In that environment, even the biggest players are learning that sometimes the smartest move isn’t to double down—but to step back, reassess, and live to fight the next round.

Source: Detroit Free Press