LG Chem's large-scale electric vehicle battery supply contract with US automaker Ford has been cancelled, further highlighting the uncertainty in the global electric vehicle market. The cancelled contract is worth approximately 9.6 trillion won, representing about 28% of the company's annual sales—a significant proportion.
On December 17, LG Chem announced that Ford had terminated its long-term battery supply contract, citing adjustments to its electric vehicle production strategy. The two companies had reached an agreement last October to supply a total of 109 gigawatt-hours (GWh) of batteries in two phases from 2026 to 2032. The batteries were originally planned to be manufactured at LG Chem's plant in Wrocław, Poland, and supplied to the European market.
The sudden termination of this large contract is due to factors such as the recent stagnation in electric vehicle demand, the long-term nature of the so-called "electric vehicle gap," and changes in the policy environment. Ford, recently concerned about profitability due to reductions in U.S. tax incentives, has shifted its strategy to strengthen hybrid and internal combustion engine vehicles. Accordingly, the company decided to cease production of its main electric models, such as the F-150 Lightning, and focus its efforts on the relatively higher-margin truck, van, and energy storage systems (ESS) sectors.
LG New Energy stated that the contract termination was a measure taken in response to changes in the client's strategy, and that the medium- to long-term cooperative relationship between the two parties will remain unchanged. In reality, the termination of one contract does not signify the severing of the overall cooperative relationship. Ford, too, has not completely stopped investing in electric vehicle-related technologies and fields, but rather interprets it as a readjustment of its business strategy.
This case once again demonstrates that the electric vehicle industry continues to evolve rapidly based on policy, demand, and technological factors. While the global electric vehicle market is difficult to predict in the short term due to factors such as digital transformation, strengthened carbon neutrality policies, and advancements in battery technology, long-term growth is expected to continue. However, flexible collaboration between manufacturers and component suppliers, as well as strategies for organically responding to market changes, are anticipated to become increasingly important.
