Ford scraps $6.5bn EV battery deal with LG Energy as demand slows

Ford Motor has cancelled a $6.5 billion electric vehicle (EV) battery supply deal with South Korea’s LG Energy Solution, marking another sharp pullback by the global auto industry from battery-powered cars as demand weakens and policies shift.

LG Energy Solution said on Wednesday that Ford terminated the agreement after reviewing its electric vehicle plans. The battery maker disclosed the decision in a regulatory filing, saying it received formal notice from Ford.

The deal, worth about 9.6 trillion won ($6.50 billion), was signed in October last year. It covered two contracts to supply electric vehicle batteries to Ford’s European operations starting in 2026 and 2027.

LG Energy Solution said Ford’s decision followed the automaker’s move to halt production of some electric vehicle models. The company cited changes in government policy and a weaker outlook for electric vehicle demand.

Ford confirmed earlier this week that it is scaling back its electric vehicle strategy. On Monday, the U.S. automaker said it would take a $19.5 billion writedown and cancel several electric vehicle models.

The move is one of the clearest signs yet of the auto industry’s retreat from aggressive electric vehicle expansion. Ford said the decision was driven by shifting policies under the Trump administration and slower-than-expected consumer demand for electric cars.

Battery makers are feeling the impact of these changes. The cancellation removes a major future revenue stream for LG Energy Solution, one of the world’s largest electric vehicle battery suppliers.

LG Energy Solution said it is taking steps to protect its intellectual property and adjust its business plans. The company did not provide further details on how it plans to replace the lost Ford contracts.

The setback follows another blow to South Korea’s battery industry. Last week, battery maker SK On said it decided to end its joint venture with Ford to build battery factories in the United States.

SK On and Ford had announced the joint investment in 2022. The two companies planned to spend $11.4 billion on battery plants aimed at supporting Ford’s electric vehicle push in North America.

The recent decisions highlight growing pressure across the electric vehicle supply chain. Automakers are reassessing production plans, while battery companies face rising costs and uncertain demand.

Industry analysts say slower consumer adoption, high interest rates, and policy uncertainty are forcing companies to rethink timelines and investments. Governments in key markets have also reduced or reviewed incentives for electric vehicle purchases.

For South Korea’s battery makers, the changes come after years of rapid expansion. Companies such as LG Energy Solution and SK On invested heavily to meet what was expected to be surging global demand.

Now, the focus is shifting from fast growth to cost control and long-term stability. The latest cancellations suggest the electric vehicle transition may take longer than many companies once expected.

Read also: Ford to cut 1,000 Jobs in Cologne as Europe’s EV demand slows