![LG Energy Solution's plant in Poland [LG ENERGY SOLUTION]](https://www.byteseu.com/wp-content/uploads/2025/12/b2c9f4fd-640a-4abb-b624-b68498ba9a48.jpg)
LG Energy Solution’s plant in Poland [LG ENERGY SOLUTION]
The fallout from Ford Motor’s decision to terminate a $6.5 billion supply contract with LG Energy Solution — a deal worth roughly 30 percent of the battery maker’s annual sales — has sent shock waves through Korea’s battery industry, stoking fears of broader contagion.
The move follows Ford’s earlier dissolution of a $11 billion battery joint venture in the United States with SK On, citing slowing EV demand.
LG Energy said Wednesday that it had received formal notice from Ford ending a six-year deal valued at $6.5 billion to supply EV battery cells and modules. The deal was set to commence in January 2027 and would have produced 75 gigawatt-hours of batteries.
The cancelled deal amounted to 28.5 percent of LG Energy Solution’s revenue last year and marked the company’s largest order over the past 18 months — a key contract intended to lift utilization rates at its European manufacturing facilities.
![Ultium Cells' third plant in Michigan. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]](https://www.byteseu.com/wp-content/uploads/2025/12/7625bea7-0d5e-4bf8-b660-489172128567.jpg)
Ultium Cells’ third plant in Michigan. Ultium Cells is a 50:50 joint battery venture between LG Energy Solution and General Motors. [LG ENERGY SOLUTION]
The dissolution is interpreted as the result of Ford’s overhaul of its EV strategy following the Donald Trump administration’s abolishment of tax credits of up to $7,500 for EVs.
Ford halted the production of key models such as the F-150 Lightning pickup while pursuing a strategy to increase the share of hybrid and internal combustion vehicles. EV sales in the U.S. market plunged 42 percent in November compared to a year earlier.
Even the European Union has withdrawn its ban on the sale of internal combustion vehicles starting in 2035.
“At this juncture, it will not be easy for LG Energy Solution to immediately secure new orders capable of replacing the lost volume, making delays to improvements in utilization rates at European plants in 2027 all but inevitable,” said Cho Hyun-ryul, a senior analyst at Samsung Securities.
“While a recovery in profitability driven by the strength of localized energy storage system battery production in the United States remains a positive factor, the slowdown in EV demand in both the United States and Europe could intensify through the first half of 2026.”
The order was originally set to be produced at LG Energy’s plant in Poland, accounting for 16.7 percent of the facility’s annual capacity. The plant is currently operating at less than 50 percent utilization.
Following the termination of its contract with LG Energy, Ford appears poised to strengthen its collaboration with China’s CATL. Last week, the U.S. automaker announced the dissolution of its joint venture with SK On across three battery plants in the United States, deciding to assume full ownership of two facilities in Kentucky, while SK On will take full control of the plant in Tennessee.
Ford has officially announced plans to leverage CATL’s licensing to establish and operate lithium iron phosphate, or LFP, battery production at its Kentucky plant within 18 months.
Other automakers, including General Motors, are also revising their EV strategies. In April, GM sold its stake in a Michigan battery plant — operated jointly with LG Energy — to the Korean company.
Several joint ventures between U.S. automakers and Korean battery makers have yet to begin operations. Samsung SDI has two joint plants with Stellantis in Indiana, and one of them has not been fully completed, while production at the first plant has already been redirected toward LFP batteries for energy storage systems.
Samsung SDI is also constructing a joint plant with General Motors in Indiana.
Shares of local battery makers and material companies suffered a sharp drop on Thursday. LG Energy Solution slipped 8.9 percent to close at 378,500 won ($255) while its material affiliate LG Chem fell 8.5 percent to 333,000 won. Samsung SDI plunged 6.1 percent to 277,000 won, while SK Innovation, the parent company of SK On, dropped 5.2 percent to 104,800 won.
BY SARAH CHEA [[email protected]]