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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] LG Energy Solution has been impacted by shifting market conditions, including a prolonged electric vehicle (EV) demand slowdown and policy rollbacks on electrification in the United States and Europe.
The company disclosed on December 17 that its long-term battery cell and module supply agreement with U.S. automaker Ford Motor Co. has been terminated following a contract cancellation notice from the counterparty.
In October last year, LG Energy Solution and Ford entered into long-term supply agreements covering 75 GWh of batteries over a six-year period from 2027 to 2032, and an additional 34 GWh over five years from 2026 to 2030.
The batteries were to be produced entirely at LG Energy Solution’s Wroclaw plant in Poland and supplied to Ford’s electric vehicles for the European market. The next-generation E-Transit electric commercial vehicle was cited as one of the primary models slated to use the batteries.
The contract that has now been terminated pertains to the 2027–2032 supply agreement, with a cancellation value of approximately KRW 9.6 trillion, equivalent to 28.5% of LG Energy Solution’s most recent annual revenue.
LG Energy Solution said the termination resulted from Ford’s decision to discontinue production of certain EV models amid changes in the policy environment and EV demand outlook. The company added that it plans to engage in amicable discussions with Ford to minimize the negative impact of the contract termination.
Ford has recently overhauled its strategy to focus on more profitable hybrid and internal combustion engine vehicles after the U.S. administration under President Donald Trump eliminated tax credits previously available for EV purchases.
Separately, SK On and Ford have also decided to dismantle BlueOval SK, their U.S.-based EV battery joint venture, and transition to a structure under which each company will independently operate its own production facilities.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
