Dive Brief:
- Ford Motor Co. has terminated its multi-billion dollar supply deal with South Korea-based LG Energy Solution for 75 gigawatt hours of battery cells for its electric vehicles, according to a Dec. 18 regulatory filing by the battery maker.
- The value of the supply contract for the European market was worth 9.6 trillion won ($6.5 billion) according to the filing, which was based on the battery selling price when the deal with Ford was executed on Oct. 14, 2024. The contract’s termination was effective Dec. 17.
- The cancellation of Ford’s supply contract follows a major strategic move announced by the company this week to revise its previous electrification goals and focus more launching more affordable hybrid vehicles and others with highly efficient, internal combustion engine powertrains.
Dive Insight:
According to LG Energy Solution’s regulatory filing, Ford’s decision was based on its plans to cancel certain EVs models, changes in the policy environment and weakening EV demand. The automaker also announced last week that it was canceling the electric F-150 Lightning due to sluggish sales.
“The customer discontinued the development of a specific vehicle model due to a shift in its electrification strategy,” LG Energy Solution spokesperson Sophia Kim said in an emailed statement to WardsAuto.
WardsAuto also reached out to Ford for a statement and has not heard back as of publication time.
But with slowing EV demand, Ford does not require the battery cell production capacity it previously anticipated. However, Kim said that LG Energy Solution will remain committed to its ongoing mid- to long-term partnership with Ford.
Ford currently relies on the sales of gas-powered trucks and SUVs in the U.S. for a majority of its profits and has yet to make money on low-volume EVs. Ford said that the electric F-150 Lightning will be replaced with a gasoline range-extender powertrain version.
As part of the initial agreement with Ford announced in October 2024, LG Energy Solution was to supply the company with an estimated 109 gigawatt hours of batteries for electric commercial vans in Europe beginning in 2026 as part of a contract ranging from four to six years. But a second regulatory filing by LG Energy Solution dated Dec. 18 states that the canceled contract was for 75 GWh of battery cells.
According to The Korea Economic Daily, Ford had two battery supply deals with LG Energy Solution, one for 75 GWh of cells from 2027 to 2032 and another for 34 GWh running from 2026 to 2030.
The cancellation of the battery supply deal with LG followed a mutual agreement announced last week between Ford and battery maker SK On to dissolve their electric vehicle battery joint venture BlueOval SK.
The joint venture was established in September 2021 as part of a planned $11.4 billion investment by the two companies to build three large-scale manufacturing plants in the U.S. to supply battery cells for future Ford EVs.
Battery maker LG has been working since last year to diversify its portfolio away from EV batteries to boost its resiliency to potential market fluctuations, which have impacted Ford as well. The automaker said it was declaring a $19.5 billion writedown related to its revised EV investments as it focuses on more affordable hybrid ICE vehicles and new low-cost EV models.
In October 2024, the LG Energy Solution announced it will focus more on producing more energy storage system batteries, which are in high demand due to the data center construction boom in the U.S. to meet AI demands. The plans also include the company establishing a software and services business for energy storage systems and doubling its revenue by 2030.
However, LG said in press release last year that it remains focused on innovating for automotive customers, and will continue to develop advanced batteries for the auto industry.
