SK On’s $10.9 Billion Nissan Battery Deal Faces Cancellation Risk

Korea Economic Daily

Forecast Trend Report by Period

SK On’s battery supply deal with Nissan Motor Co., valued at about 15 trillion won ($10.9 billion), is at high risk of being canceled, the battery industry said on May 4. The agreement covered batteries for Nissan’s plant in Canton, Mississippi, but the automaker has scrapped plans to build electric vehicles there. The two sides have reopened talks on the contract.

The development adds to signs that partnerships between South Korean battery makers and global automakers are unraveling as the US cuts back electric-vehicle subsidies and demand shifts toward internal-combustion engines and hybrids.

◇Nissan Scraps EV Production Plan

According to the battery industry, SK On and Nissan are reviewing a 99.4-gigawatt-hour battery supply agreement due to begin in 2028. The companies signed the deal in March 2025 to supply batteries for about 1 million midsize EVs. The contract was worth about 15 trillion won ($10.9 billion). It was SK On’s first battery supply agreement with a Japanese automaker.

The agreement hit trouble as Nissan’s EV transition slowed more than expected. Industry officials said Nissan notified battery and other parts suppliers in April that it would withdraw its EV production plan for the Canton plant. Nissan had planned to produce four EV models in the US from 2028 — two sport utility vehicles and two sedans — but that plan has now been postponed indefinitely. A companywide target to make EVs account for 40% of its lineup this year and 60% by 2030 has also been delayed. It is unclear whether Nissan will announce a revised US EV launch plan.

The Canton plant is now expected to be used to build pickup trucks and SUVs. An SK On official said the company had been informed of Nissan’s decision and was renegotiating the battery supply agreement.

Nissan was an early EV pioneer, launching the Leaf in 2010 as the world’s first mass-produced electric vehicle. But it failed to introduce a follow-up model for more than a decade and lost ground after underinvesting in areas such as dedicated EV platforms. The company later announced investment plans to catch up with Tesla Inc. and Chinese EV makers, but has struggled to regain momentum. One industry official said Nissan’s delayed EV transition, along with the collapse of its proposed merger with Honda Motor Co., deprived new businesses of momentum.

◇European Sales Rebound

Other South Korean battery makers are also grappling with canceled deals in the US. Samsung SDI Co. is considering liquidating StarPlus Energy, its battery joint venture with Stellantis NV in Indiana. LG Energy Solution Ltd. has sold down its stake in NextStar Energy, its Canadian joint venture with Stellantis. Ford Motor Co. and SK On have also agreed to split assets tied to their BlueOval SK venture. When automaker joint ventures break apart, existing battery supply contracts are often renegotiated or scrapped, dealing a heavy blow to earnings. The trend has worsened since October 2025, when the US government eliminated EV subsidies, or tax credits, during the prolonged slowdown in mainstream EV demand.

One bright spot is Europe, where EV demand is rising and sales are gradually recovering. Sales of European EVs fitted with SK On batteries rose 29% in March from a year earlier, led by Volkswagen AG’s ID.7 and Audi’s Q4 e-tron. At SK On’s second plant in Komarom, Hungary, all six production lines were operating as of the end of April, lifting utilization to near full capacity. Europe’s EV market is also rebounding after hitting bottom. New EV registrations in 15 major countries rose 51.3% from a year earlier to 224,000 units in April. The recovery has been supported by policy measures and a sharp increase in oil prices linked to the US-Iran war, which has boosted EV demand.