South Korea’s SK Innovation and Germany’s Continental have ended their battery joint venture due to low demand for EVs.
The venture, SK Continental E-motion, was launched in January last year. SK Innovation took charge of supplying battery cells while Continental was responsible for battery control systems.
SK Innovation will buy a full stake in the Korean branch of the joint venture at $13.9m via off-board transactions within this year to dissolve it.
The two companies promised to invest a total of $336m over five years when establishing the venture, but the actual investment fell far short of the volume.
“The market for battery cells is less attractive than we thought two to three years ago,” told Continental chief financial officer Wolfgang Schaefer Bloomberg in November.
According to SK Innovation, the market conditions in Europe shifted away from EV towards diesel. Falling international oil prices were also a factor in the company’s decision.
The Korean company will also restructure its EV business in Korea and China.
Global electric car sales are expected to remain shy of 1m in 2020, less than 1% of the entire vehicle market, according to market researcher IHS Automotive.
Last month, Daimler announced it will shut down the only EV battery manufacturing plant in Germany.