LG Energy Solution Terminates $6.5 Billion Battery Supply Deal with Ford: Reuters

LG Energy Solution has terminated an electric vehicle battery supply contract with Ford Motor worth approximately 9.6 trillion won ($6.5 billion), the South Korean battery manufacturer announced in a regulatory filing on Wednesday, according to Reuters.

The termination followed notification from Ford after the automaker decided to halt production of some EV models due to policy changes and shifts in demand outlook, Reuters reported. The canceled amount represents more than a third of LG Energy Solution's total revenue from last year, according to Bloomberg.

LG Energy Solution signed two contracts in October 2024 to supply EV batteries to Ford Motor in Europe starting in 2026 and 2027, Reuters noted. The original agreement called for up to 34 gigawatt-hours of batteries between 2026 and 2030, along with 75 gigawatt-hours for commercial vehicles between 2027 and 2032, according to Stocktwits.

The deal termination comes as Ford announced on Monday it will take a $19.5 billion writedown and is canceling several electric vehicle models, Reuters reported. The automaker is also ending its joint venture with South Korean battery maker SK On for their joint battery factories in the United States, according to Reuters.

Ford's decision reflects broader challenges facing the EV industry, including slower-than-expected consumer adoption and shifting regulatory environments. The automaker had been among the traditional car manufacturers investing heavily in electric vehicle production to compete with Tesla and other EV-focused companies.

For LG Energy Solution, the contract cancellation represents a setback in its efforts to expand its customer base beyond its primary client, General Motors. The company has been working to diversify its portfolio amid intense competition in the global battery supply market.

The termination also highlights the volatility in the EV supply chain as automakers reassess their electric vehicle strategies in response to market conditions. Battery suppliers have been scaling up production capacity to meet projected demand, but recent pullbacks by major automakers have created uncertainty in the sector.

LG Energy Solution shares closed Wednesday down 0.6 percent at 415,500 won, according to AJU Press. The company has not announced whether it plans to reallocate the production capacity that had been designated for Ford to other customers.

Ford has not provided specific details on which EV models will be affected by the production halt or the timeline for the changes to its electric vehicle strategy.