Ford Motor has terminated its $6.5 billion EV battery agreement with LG Energy Solutions. The regulatory filing from LG Energy has revealed the termination of the contract. If you wish to know more about their agreement and Ford EV strategy, you can check the full details here.
The South Korea-based LG Energy Solutions and Ford signed the battery contract in October 2024, which Ford has now terminated, as it was effective from 17 December 2025. The cancellation of the deal will affect the Ford EV roadmap.
The company would have to revise its EV goals and focus on how to make affordable hybrid vehicles and others. Along with the cancellation of the contract announcement, the brand also announced the termination of the Electric F-150 Lightning due to poor sales.
What was the Ford and LG Energy agreement about?
According to the agreement announced between LG Energy and Ford, it contains the following obligations:
- The agreement states that LG Energy will supply 109 gigawatt hours of batteries in Europe to the company for electric commercial vans in 2026.
- The contract was for four to six years, but the second regulatory filing for the battery makers states that the canceled contract was the deal for 75GWh of battery cells.
- The report says Ford has two deals with LG Energy, one is for 34 GWh battery cells from 2026 to 2030, and another is for 76 GWh of battery cells from 2027 to 2032.
Why did Ford cancel the contract with LG Energy Solutions?
Both parties have announced the termination of the contract worth $6.5 billion; let’s see what the reasons for the cancellation are:
- Ford announces the cancellation of deals as it plans to cancel certain EV models due to changes in EV policies and a reduction in EV demand. The brand says around $19.5 billion is written down and cancelled some EV models due to the change in Trump administration policies and industry shift from battery-powered vehicles.
- The industry reports show the rising costs, EV demand reduction, and policy uncertainty as the key drivers for the changing EV landscapes.
- Another South Korean battery maker, SK, ended their venture with Ford for their joint battery factories that were to be established in the US.
How would the termination of the agreement affect the Ford EV strategy?
The ending of the joint venture with SK and the termination of the battery agreement with KG Energy Solutions have raised concerns about their effect on Ford’s EV strategy in the following way:
- According to reports, Ford has stopped the production of certain EV models, such as the F-150 Lightning and others, for which they have signed the battery contracts.
- The industry is seeing the shift to hybrids and affordable EVs, so Ford needs to focus on developing the hybrid models, EREVs (extended-range EVs), or small or affordable EVs to meet the industry demands.
- Currently, the revenue of Ford comes from its SUVs and gas-powered trucks sold mainly in the US, and it has yet to make any money on EVs.
- With the change in EV policies and the reduction in EV demands, Ford needs to work again on its EV roadmap, and the work starts with terminating the contracts and meeting the current industry demands.
How did the cancellation impact LG Energy and the industry?
The cancellation of such big deals will affect the battery makers and industry, leading to many issues, such as:
- The cancellation of the Ford deal with LG Energy has dropped its shares to 7.6% after the announcement, creating the sharpest daily drop in two months.
- The cancellation of the deal will affect LG Energy Solutions’ operations in Europe, and it will be hard for the company to secure new orders. The utilization rate of the LG energy could fall to 29% from the current 45% rate.
- The cancellation of the deal followed the termination of the SK and Ford joint venture, which created a bigger problem for the battery supply industry, as it will affect thousands of jobs, the EV transition pace, and the future of battery technology.
- The cancellation of the deal has showcased how the changing dynamics of the EV industry can create risk for long-term investment and stop such long-term investment.
- LG Energy planned last year to work on more energy storage batteries, software, and services businesses, but now it can be affected due to the cancellation of such a big investment.
Ford cancelled the billion-dollar deal with LG Energy Solutions, following the scrapping of EV models and $19.5 billion EV-related investment, and is now moving toward the hybrid vehicle, considering the policy shift and EV demand.
