Then-Nissan Motor Chief Operating Officer Ashwani Gupta announces the Japanese carmaker's plan to invest $500 million to transform its Canton Vehicle Assembly Plant to build electric vehicle models starting in 2025 during an event in Canton, Miss., Feb. 18, 2022. Courtesy of Nissan Motor

Repeated cancellations of electric vehicle (EV) production projects in the United States are weighing on Korean companies that had planned to supply batteries, prompting them to tighten partnerships with European automakers.

SK On is reconsidering its plan to supply $10 billion worth of batteries to Nissan Motor’s Canton plant in Mississippi after the Japanese carmaker decided not to produce EVs at the U.S. facility.

The move follows SK On’s decision last December to dissolve its joint venture with Ford Motor amid slow progress in the U.S. carmaker’s electrification efforts, raising concerns about the Korean battery maker’s business there.

In March last year, SK On agreed to supply 99.4 gigawatt hours of high-nickel batteries to Nissan, marking the first time a Japanese automaker would use the Korean company’s products.

However, after delays in its electrification strategy, Nissan informed dealers and parts suppliers in the U.S. on April 30 that it would cancel a $500 million project to produce electric SUVs in Canton.

"Canton does have a future that will include diverse powertrains, but it will not include EVs," said Ashli Bobo, spokesperson of Nissan's U.S. operations.

The Ohio plant of Ultium Cells, the joint venture between LG Energy Solution (LGES) and General Motors / Courtesy of LGES

LG Energy Solution (LGES), which terminated its Canadian joint venture agreement with Stellantis in February, has incurred losses due to the suspension of its joint venture plant with General Motors (GM).

"Ultium Cells, the joint venture between LGES and GM, will shut down factories throughout the first half of this year, so its EV battery sales volume in the U.S. market will likely be nearly zero during the period," iM Securities analyst Jeong Won-seok said, as LGES reported a first-quarter operating loss of 207.8 billion won.

Source: Korea Times News