SK On and Ford Secure 12 Trillion KRW in Policy Support Funds from US Government

BlueOvalSK Utilizes Local Factory Construction Funds
Record-High Financial Support for Battery Sector

BlueOvalSK, the battery production joint venture between SK On and Ford Motor Company, has secured policy support funds amounting to 12 trillion KRW from the U.S. government. This is the largest-ever financial support related to battery manufacturing from the U.S. government.

On the 23rd, SK On announced that BlueOvalSK has conditionally obtained approval to borrow up to $9.2 billion in policy funds from the Department of Energy (DOE).

SK On·Ford Joint Venture BlueOvalSK Kentucky Plant 1

This financial support is provided under the DOE's Advanced Technology Vehicles Manufacturing (ATVM) program. The ATVM program was established in 2007 under the Energy Independence and Security Act. It is a loan support program for automobile and related parts manufacturing businesses. BlueOvalSK plans to finalize the main contract and secure the funds as early as this year.

The ATVM loan interest rate is applied at the level of U.S. Treasury bond rates. Upon signing the main contract, borrowing will be possible at a low interest rate equivalent to the 10-year U.S. Treasury bond rate.

SK On explained that this was possible because the DOE gave a favorable evaluation of BlueOvalSK’s production capacity, which is based on technological expertise. An SK On official said, "The DOE expects the BlueOvalSK project to play a significant role in the electrification of the U.S. automotive market and strengthening of the supply chain."

Once the contract is finalized, BlueOvalSK plans to invest the secured funds in the construction of three plants: Kentucky Plants 1 and 2, and Tennessee. The three BlueOvalSK plants, aiming for sequential commercial operation starting in 2025, will have a total production capacity exceeding 120 GWh. This scale can produce approximately 1.2 million electric vehicles annually, based on 105 kWh batteries per vehicle.

Furthermore, SK On expects its financial stability to be further strengthened by securing large-scale investment funds through U.S. policy funds. Last July, SK On had already secured 2.6 trillion KRW in investment funds for its European battery business, including the Hungary Plant 3, through public export credit agencies (ECAs) such as Euler Hermes in Germany, Korea Trade Insurance Corporation, and the Export-Import Bank of Korea.

Additionally, SK Innovation’s equity investment of 2 trillion KRW, 1.2 trillion KRW from the Korea Investment PE East Bridge consortium, 1.1 trillion KRW from the MBK consortium and Saudi SNB Capital, 510 billion KRW from Singapore-based financial investors, and 1.2 trillion KRW in Eurobonds are continuing to secure investment funds.

SK On also plans to reliably secure investment funds through various methods such as operating cash flow generated from business ramp-up, sharing with partners through the JV, and incentives from investment countries.