DETROIT — Ford is forming a joint venture with one of its battery suppliers that will build two North American factories to make batteries for roughly 600,000 electric vehicles per year by the middle of this decade.
The deal with SK Innovation, of Korea, announced today, sets up a potential confrontation between the companies and the United Auto Workers, which issued a statement saying Ford has a moral obligation to make sure plant workers are paid union wages.
The UAW and President Joe Biden have advocated for union jobs in new factories as the country transitions from gasoline-burning vehicles to those powered by electricity. The issue almost certainly will be part of negotiations on a new UAW national contract in 2023.
The joint venture called BlueOvalSK is the start of Ford’s plan to vertically integrate key parts of the electric vehicle supply chain. The companies say they have signed a memorandum of understanding, but details on the ownership structure and factory locations have yet to be worked out.
Company executives wouldn’t say whether jobs at the new factories would be union. Ford North America Chief Operating Officer Lisa Drake said the companies are still in the memorandum of understanding phase. “We don’t have our labor strategy defined yet. That will be determined by the joint venture itself once that entity is set up” this summer, she said.
SK Innovation already has a U.S. battery factory in operation in Commerce, Ga., and says it’s expanding production in Europe and China. It plans to be one of the top three electric vehicle battery suppliers in the world by 2025, according to a statement. The company has a contract with Ford to make batteries for a new electric F-150 pickup truck, which is due in showrooms by the middle of next year. Ford’s F-Series pickups are the top-selling vehicles in the U.S.
The announcement comes after Ford got caught up in a trade secrets fight between SK Innovation and LG Energy Solution. The U.S. International Trade Commission decided in February that SK stole 22 trade secrets from LG Energy, and that SK should be barred from importing, making or selling batteries in the United States for 10 years.
The decision gave SK four years to make batteries for Ford, and it could have left the company scrambling to supply the electric F-150, called the Lightning. The dispute was settled in April with SK agreeing to pay $1.8 billion and an undisclosed royalty.