Ford cancels $7.2 billion battery supply contract with LG

LG Energy Solution said on Dec. 17 that it has terminated a large electric vehicle battery supply contract with U.S. automaker Ford Motor Co., a deal valued at $7.2 billion.

The move reflects Ford’s strategic shift as the prolonged slowdown in electric vehicle demand continues. The cancellation amount equals about 28.5 percent of LG Energy Solution’s most recent annual revenue, underscoring the scale of the agreement.

The Ford LG battery deal traces back to October last year, when the two companies signed two separate battery supply agreements. Under the first contract, LG Energy Solution agreed to supply 75 gigawatt-hours (GWh) of batteries over six years starting in 2027.

Under the second, it committed to supplying 34 GWh over five years beginning in 2026. Both contracts called for batteries to be produced at the company’s plant in Wroclaw, Poland.

Policy changes and Ford’s revised EV strategy

However, Ford has now canceled the 75 GWh contract scheduled to begin in 2027. An official at LG Energy Solution said the 34 GWh agreement, which begins next year, will remain in place. Therefore, only part of the original supply arrangement has been scrapped, while cooperation between the two companies will continue on a reduced scale.

Industry analysts link the cancellation to policy changes under the Trump administration, which eliminated tax credits previously available for electric vehicle purchases. As a result, Ford has shifted its focus toward more profitable segments, including hybrid vehicles, internal combustion engine models, and energy storage systems (ESS).

In addition, Ford has already decided to halt production of some of its flagship electric models, including the F-150 Lightning pickup truck. The company has also recently suspended its electric vehicle battery joint venture with SK On, signaling a broader pullback from aggressive EV expansion plans.

LG Energy Solution’s response

In a statement, LG Energy Solution said the contract termination followed changes in the customer’s electrification strategy and the suspension of development for certain vehicle models. However, the company emphasized that it intends to maintain a long-term cooperative relationship with Ford despite the partial cancellation.

The company added that it will continue to monitor market conditions and adjust production and investment plans accordingly as global automakers reassess electric vehicle demand and profitability.

BY NA SANGHYEON   [na.sanghyeon@joongang.co.kr]