By Ben Foldy

Ford Motor Co. has struck a deal with South Korean firm SK Innovation Co. to form a joint venture to build electric-car batteries in the U.S., the latest in the auto industry's efforts to fortify supplies of this critical part ahead of the rollout of more plug-in models.

The No. 2 U.S. auto maker by sales said Thursday it had entered into a memorandum of understanding with the battery-making company to establish the joint venture, which will be called BlueOvalSK. The partnership aims to build batteries and related components in the U.S. with the goal of producing approximately 60 gigawatt hours annually by mid-decade, the two companies said.

Ford executives said the target output would likely lead the joint venture to build two new battery plants in North America, but details have yet to be completed and are expected to come later this year. The venture and ownership structure are also still under discussion and will be subject to regulatory approvals, the executives said.

Ford shares were up 4.2% in trading Thursday morning.

SK Innovation is one of the world's largest battery producers and Ford already has a supply relationship with the firm to make batteries for some models, including its coming electric F-150 truck.

Ford, like many other major car companies, is investing billions to develop more battery-powered models, a shift being spurred on by tougher tailpipe-emissions regulations globally and more governments setting target dates for phasing out the sale of gasoline-engine vehicles.

Ford CEO Jim Farley said last month that the company intends to get into the battery-making game with plans to develop its own lithium-ion batteries for electric cars. Other legacy auto makers are also taking a similar route, following the lead of electric-car maker Tesla Inc. in making electric-vehicle components in house rather than relying on outside suppliers.

Rival General Motors Co. is already building an electric-car battery plant in Ohio through a joint venture with LG Chem Ltd., set to open next year. Earlier this year, the Detroit-based car maker said it would construct a second $2.3 billion battery factory in Tennessee through the partnership as it gets ready to introduce more plug-in models.

As car companies look to expand their electric-model lineups, the race to secure battery supplies is intensifying, as some analysts raise concerns that the fast-growing demand will quickly outstrip the existing manufacturing capacity.

Write to Ben Foldy at Ben.Foldy@wsj.com

(END) Dow Jones Newswires

05-20-21 1046ET