Ford cancels $6.5 billion battery deal with LGES amid massive EV strategy reset

Ford Motor Co. has terminated a major battery supply agreement worth 9.6 trillion won (approx. $6.5 billion) with South Korea’s LG Energy Solution (LGES). The move, disclosed by LGES in a regulatory filing on Wednesday, December 17, 2025, underscores a dramatic retreat by the American automaker from its high-cost, pure electric vehicle (EV) ambitions.

The cancellation covers battery cell and module supplies for Ford’s European electric vehicles originally scheduled from 2027 to 2032. The deal was equivalent to nearly 28.5% of LGES’s annual revenue, marking a significant blow to the supplier’s long-term order book.

Strategic Pivot: Hybrids and the 700-Mile Range-Extender This decision follows Ford’s announcement earlier this week (December 15) of a staggering $19.5 billion write-down as it scraps several planned EV models, including the next-generation electric pickup codenamed “T3” and electric commercial vans.

In a major technical shift, Ford is replacing the pure-electric F-150 Lightning with a next-generation Extended-Range Electric Vehicle (EREV). Unlike a traditional hybrid, the F-150 Lightning EREV will be propelled 100% by electric motors but will carry a high-power gas generator to enable an estimated 700+ mile range, designed specifically for heavy-duty towing and long-distance travel.

Policy and Market Headwinds Ford CEO Jim Farley described the move as “customer-driven,” but industry analysts point to significant policy shifts. In the US, the Trump administration’s repeal of the $7,500 federal EV tax credit and loosening of fuel-economy standards have eroded the business case for large, battery-only trucks.

Simultaneously, the European Commission proposed a major revision to its 2035 targets on December 16, easing the 100% zero-emission requirement to a 90% CO2 reduction target. This “90% Rule” effectively allows internal combustion and hybrid engines to remain on sale indefinitely, provided manufacturers use carbon-offsetting credits and sustainable fuels.

LG Energy Solution shares closed Wednesday at 415,500 won, down 0.6%, following a sharper 6% slide on the previous day.

Brief Summary

Ford has canceled a $6.5 billion battery supply contract with LG Energy Solution as it scales back its electric vehicle plans. The move highlights growing uncertainty in the global EV market and adds pressure on battery suppliers as automakers rethink investment timelines and demand forecasts.

FAQs

Q1. Is Ford still producing the F-150 Lightning? 

Production of the current all-electric F-150 Lightning is ending this year. It will be replaced by the next-gen EREV version featuring a 700+ mile range.

Q2. Why was the LG Energy Solution deal specifically canceled? 

The contract, meant for European EV models, was scrapped because Ford is “halting production of certain EV models” due to shifting European policies and slower-than-expected consumer demand.

Q3. What is the new EU “90% Rule”? 

As of December 16, 2025, the EU replaced its 2035 ban on gas cars with a 90% emissions reduction target. This allows 10% of new car sales to be hybrids or ICE vehicles if emissions are offset.

Q4. What happened to Ford’s joint venture with SK Innovation? 

Ford is dissolving the BlueOval SK joint venture. Ford will now independently manage its battery operations in Kentucky, while SK On will take over the Tennessee site.