Ford Cancels US$6.5 Billion EV Battery Deal With LG Energy

Ford has canceled an electric vehicle battery supply agreement valued at roughly US$6.5 billion, according to a regulatory filing by South Korea’s LG Energy Solution, as the automaker pulls back further from its electric vehicle expansion amid policy shifts and softening demand.

LG Energy Solution said on Dec. 17 that Ford notified the company of its decision to terminate the contract, which was valued at approximately ₩9.6 trillion. The automaker cited changes in public policy and a revised outlook for electric vehicle demand as the primary reasons for ending the agreement.

The termination affects two contracts signed in October under which LG Energy Solution was scheduled to supply batteries for Ford’s European electric vehicle programs starting in 2026 and 2027. The battery maker did not disclose which vehicle models or production volumes were involved.

The move underscores a broader strategic recalibration by Ford as it reassesses the pace and scale of its EV investments. On Dec. 15, the company announced it would take a US$19.5 billion accounting charge and cancel several planned electric models, citing weaker-than-anticipated demand, evolving market conditions, and changes in US public policy under the administration of President Donald Trump.

The write-down is widely seen as a defining moment in the auto industry’s retreat from aggressive EV expansion, a trend reinforced by the rollback of federal tax incentives for electric vehicles. Following Ford’s disclosure, the company’s shares rose 1.3% on Dec. 16. By contrast, Tesla shares fell 0.6%, General Motors stock was little changed, and US-listed shares of Stellantis rose about 1%.

Shifts in Washington have added pressure across the sector, prompting Ford, GM, and Stellantis to temper EV ambitions in the United States and pivot toward hybrid and internal combustion offerings. Morgan Stanley analysts described Ford’s move as a “painful but necessary reset,” saying it reflects changing consumer preferences and the need to restore profitability and returns.

The retrenchment is rippling through Ford’s battery supply chain. Last week, South Korea’s SK On said it had decided to dissolve its joint venture with Ford related to battery manufacturing plants under development in the United States, citing a reassessment of market conditions.

Ford and SK On had announced in 2022 plans to invest US$11.4 billion to build battery plants in the U.S. to support domestic EV production. The termination highlights the growing challenges facing large-scale battery investments as automakers scale back capital commitments and adjust production timelines.

LG Energy Solution did not say whether the cancellation would have further financial consequences or whether capacity earmarked for Ford would be reassigned. Ford has not provided additional comment beyond its recent disclosures on EV-related charges and model cancellations.