SK Battery America, a subsidiary of South Korean firm SK On, one of the world’s largest battery makers, is scaling back production on several fronts in response to a changing market for the vehicles.
As an EV market turbocharged by federal incentives and high-set expectations cools off and major producers weigh cost-saving measures, SK said recently it planned to furlough workers at a $2.6 billion plant in Commerce, Georgia, that was developed with the help of an array of state and local incentives.
While there’s been no confirmation on exactly how many jobs will be axed, a company representative told the Atlanta-Journal Constitution that production wouldn’t stop and the move was a temporary measure as it adjusts to a new market reality and worked to optimize operations and management as the industry’s growth adjusts.
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Those incentives included a 20-year property tax abatement that saved the company $122.7 million, $176.8 million in state incentives, and $18.7 million in grants, in addition to land-use incentives, and developmental tax credits that totaled around $700 million.
The plant began producing batteries in January 2022 to supply major EV makers.
Georgia officials said SK had met its target of hiring 2,600 workers by the end of 2022, with hundreds more expected this year.
Georgia has made great pains to cultivate its EV industry, and today hosts several large-scale battery, vehicle, and other production facilitates, often developed with government incentives.
Cox Automotive reported that while year-over-year third quarter EV sales were up more than 49%, totaling over 300,000 and on track to surpass an annual total of 1 million for the first time, EV transaction prices across the same period widely fell amid stiffened competition that’s shifting marketplace dynamics, costs, and potential profits. EV sales leader Tesla cut prices roughly 25% in the timeframe.
“Most analysts expect a flood of new EVs in the coming three years, with the number of available EV products likely to double by 2027,” Cox said.
SK, is developing several facilities in joint ventures, and said it will reevaluate some of them, including a planned multi-billion-dollar battery plant in Kentucky with Ford Motor Co. Its development was supported by a multi-million dollar incentive package from the state and meant to support Ford’s rollout of electric vehicles and the project could face delays.
Ford itself isreevaluating the joint project while pausing or “slowing down” several other major EV investments of its own, including plants currently under construction in Tennessee and Michigan, officials said during the company’s third-quarter earnings call.
While the company would remain “bullish on its EV wing” the market was “a moving target,” said Ford CFO John Lawler.
“There’s a lot that’s going to change between now and 2026 and 2030 and we’re going to adjust appropriately,” Lawler said.
“So it’s something that’s going to adjust as we move and how that business develops,” he continued. “We’ll adjust that capital allocation appropriately and we’ll change our strategy and make different decisions as well.”