Written by Al Root
Translation: Laura Markus
Ford has reached an agreement to establish a joint venture with the Korean company SK Innovation. It is intended to increase battery production capacity in the United States and support the Detroit auto company in the production of electric vehicles. Investments in billions are planned.
Ford and SK announced the joint venture, called the Blue Oval, in September and finally closed the deal on Thursday. The new joint venture will build one battery plant in Tennessee and two in Kentucky, creating thousands of jobs.
Ford will spend about $6.6 billion on it over the next five years. The total cost of the equipment will be over $11 billion. Battery production is expected to begin around 2025, helping Ford achieve its goal of selling 2 million electric vehicles a year worldwide by 2026.
Ford’s investment in the Blue Oval is part of the company’s plan to spend about $35 billion on car electrification by 2025. This investment started years ago and has already produced popular electric cars.
Ford wants to promote its best-selling and best-known brands. The company sold more than 27,000 Mustang Mach E crossovers in 2021. Recently, Ford also began shipping the F-150 Lightning electric car and the Transit electric van – one of the world’s best-selling commercial vehicles.
Investors are backing Ford’s ambitions to become an electric car maker: the stock rose 136 percent in 2021 and reached $25.87 in 2022. However, it is down 45 percent so far this year as investors focus more on the near future. Inflation, rising interest rates and fears of a recession have dampened stock market sentiment. Auto stocks included in the Russell 3000 Index are down an average of nearly 34 percent year to date.
Ford shares fell 2.7 percent to $11.20 in early trading Thursday. The S&P 500 and the Dow Jones Industrial Average each fell 1.9 percent.
Stocks also fell on Wednesday after June inflation data came in higher than expected.