Ford Motor Company announced the cancellation of a 9.6 trillion won ($6.5 billion) battery supply agreement with LG Energy Solution, a component of a two‑part deal signed in October 2024. The cancelled portion covered 75 GWh of batteries for Ford’s European operations, with deliveries originally scheduled to begin in 2026 and 2027. The remaining 34 GWh component for E‑Transit vans, slated for 2026‑2030, remains intact.
The decision follows Ford’s strategic pivot away from large all‑electric vehicles—including the F‑150 Lightning—toward hybrids and more affordable electric models. The shift is part of a broader reset that includes a $19.5 billion charge and an increase in 2025 adjusted EBIT guidance to roughly $7 billion from a prior range of $6‑$6.5 billion. CEO Jim Farley said the company is “redeploying capital into higher‑return growth opportunities” and that the move reflects customer demand for more affordable vehicles.
LG Energy Solution’s loss of the contract reduces its European plant utilization, as the cancelled volume was scheduled to start in January 2027. Analysts note that the company will face difficulty securing new orders to replace the lost volume immediately, potentially delaying improvements in plant utilization. LG Energy Solution reported Q3 2025 revenue of 5.7 trillion KRW and operating profit of 601.3 billion KRW; the cancellation adds a headwind to future revenue streams.
Ford’s Q3 2025 earnings showed revenue of $50.5 billion, up 7.6% year‑over‑year, and earnings per share of $0.45 versus consensus of $0.35—a beat of $0.10 or 28.6%. The beat was driven by strong performance in the Ford Blue and Ford Pro segments, effective cost controls, and a higher mix of profitable vehicles. The Model e division still recorded an EBIT loss of $1.4 billion, and the company expects the full‑year EV segment to incur losses of $5 billion to $5.5 billion, with profitability projected by 2029.
Market reaction to the cancellation was evident in LG Energy Solution’s shares falling between 7.6% and 8.4% in morning trade on December 18, driven by the loss of the contract and uncertainty over plant utilization. Ford’s stock remained largely flat after its earnings release, with a slight decline attributed to the $19.5 billion charge and a cautious outlook for the EV segment, despite the earnings beat and higher guidance.
Management commentary underscored the strategic shift: CFO Sherry House highlighted that Ford’s Q3 results demonstrate “significant progress on quality and cost” and that the company is “determined to become higher‑growth, higher‑margin.” LG Energy Solution CFO Chang Sil Lee noted that the cancellation “constrained customer purchase sentiment” but that the company remains focused on improving product mix and cost efficiency.
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