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(Bloomberg) — The Trump administration will reduce an up to $9.6 billion loan to Ford Motor Co. and South Korea’s SK Innovation Co. after the companies announced plans to break up a joint venture to produce electric vehicle batteries in the US.
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An Energy Department spokesman said the loan, finalized in the waning days of the previous administration for the construction of battery plants in Tennessee and Kentucky, would be restructured to “reduce exposure to taxpayers and ensure its prompt repayment.”
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The loan will be reduced in size and Ford is working voluntarily with the department to repay more quickly, said a person familiar with the matter, who asked to not be identified because the details are private.
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Ford declined to comment.
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The change caps a swift unraveling of a prominent initiative by the second-largest US automaker and the South Korean company to build a US supply chain for EV batteries, a key priority of former President Joe Biden.
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Ford and SK On announced that they would break up their US battery-making venture, with the two partners agreeing to independently own and operate production facilities rather than run them jointly.
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The dissolution of the venture marks the latest twist in Ford’s years-long struggle to stem losses at its electric vehicle business amid a broader industry trend of slower-than-expected EV adoption. Ford lost $5.1 billion before interest and taxes on its EV business in 2024 and has said losses could be even higher this year.
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Ford and SK created BlueOval SK in 2022, a year after announcing plans to spend over $11 billion on the three battery factories and an assembly plant for electric F-Series pickups. Late last year, the joint venture finalized an agreement with the US Energy Department for an up to $9.6 billion loan.
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SK Innovation’s battery unit SK On will take over the companies’ factory in Tennessee, which has yet to start producing cells, according to an emailed statement. Ford will take over the joint venture’s side-by-side plants in Kentucky, only one of which is operating.
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US policy changes are rendering the transition away from combustion engines all the more challenging, with President Donald Trump eliminating EV purchase incentives and hollowing out fuel economy and emissions standards.
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SK On still plans to maintain a strategic partnership with Ford centered around the Tennessee plant. The Seoul-based company said it expects splitting up the JV to enhance productivity and improve its operational flexibility.
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