Rendering of LG Energy Solution’s Arizona plant in the United States. (Photo provided by LG Energy Solution)
SEOUL, Dec. 17 (Korea Bizwire) — Ford Motor Co. has canceled a 9.6 trillion-won (US$7.4 billion) battery supply contract with LG Energy Solution, a rare rupture in one of the world’s largest EV supply chains that is heightening alarm over the sector’s deepening slowdown.
LG Energy Solution disclosed Wednesday that Ford had terminated the agreement, which was set to run for six years beginning in 2027. Industry officials say such a large-scale contract cancellation is virtually unprecedented in Korea’s battery industry, where adjustments to production schedules or project delays are common but outright withdrawals of this magnitude are not.
The collapse of the deal comes as Ford reworks its electrification strategy, following its recent decision to unwind its battery joint venture with SK On. The moves underscore automakers’ retreat from earlier aggressive EV expansion plans amid weakening demand and shrinking subsidies in the United States and Europe.
For LG Energy Solution, the cancellation leaves a major hole in its medium-term sales pipeline and forces the company to reassess factory operations and capacity plans in the U.S. The company has invested heavily stateside and has been the largest recipient among Korean firms of the U.S. Advanced Manufacturing Production Credit, taking in more than 1.3 trillion won this year alone.
This file photo, provided by LG Energy Solution, shows its pouch-type, high-voltage Cell-to-Pack battery product with a mid-nickel composition. (Image courtesy of Yonhap)
Analysts say LG may now seek replacement supply deals, renegotiate with Ford, or recalibrate its operations as it confronts a significant “volume gap” after 2027. “This is the first time a contract large enough to warrant mandatory disclosure has simply evaporated,” one industry official said. “Even if there is no immediate financial hit, factory operations will inevitably be strained.”
The cancellation is also viewed as another symptom of the global “EV chasm” — an extended period of stagnant demand following years of rapid growth. Automakers’ investment pullbacks and softer-than-expected market recoveries have raised long-term uncertainty for battery makers that had rapidly expanded capacity.
SK On, which dissolved its BlueOvalSK joint venture with Ford last week, is restructuring its U.S. operations to run factories independently and expand into both EV batteries and grid-scale energy storage systems (ESS) to diversify revenue.
Some analysts caution against overreading Ford’s move, noting that Ford remains a late entrant in the EV race compared with rivals. Samsung SDI, for example, continues to operate North American partnerships with Stellantis and General Motors that remain unaffected.
The battery industry is increasingly betting on fast-growing ESS demand — fueled by data-center and AI-infrastructure expansion — as a partial buffer against the EV slump.
“Similar cases may continue as global automakers recalibrate electrification plans,” another industry official said. “Battery companies will need to move quickly, develop new markets, and adapt to shifting demand.”
Kevin Lee (kevinlee@koreabizwire.com)
