LG Energy Solution said on the 26th that it will terminate a 3.9 trillion won contract with U.S. battery pack maker FBPS (Freudenberg Battery Power System). After canceling a 9.6 trillion won contract with Ford last week, contracts totaling 13.5 trillion won fell through in the span of a week.
LG Energy Solution said the same day that, due to FBPS's exit from the battery business, it will terminate by mutual agreement the electric vehicle battery module supply contract signed in April last year. The termination amount is 3.9217 trillion won based on the exchange rate on the disclosure date, which is the remaining portion of the total $2.795 billion (about 4.04 trillion won) contract from April last year through the end of 2031, excluding the $110 million (about 160 billion won) already fulfilled. The final amount may change depending on final due diligence and exchange rates.
The company's position is that, because this deal was to supply a "standardized battery module" producible on existing lines, there is no financial hit other than a reduction in backlog. A LG Energy Solution official said, "Because no dedicated facility investment or customized R&D expense was made, there will be no investment loss or additional expense from the contract termination."
On the 17th, LG Energy Solution disclosed that it had terminated a 9.6 trillion won electric vehicle battery cell and module supply contract with U.S. automaker Ford. With the recent slump in the electric vehicle market, joint venture withdrawals and contract cancellations have been occurring frequently.
LG Energy Solution has decided to focus on reshaping its portfolio around profitability rather than maintaining backlog. It plans to reassess its customers and product portfolio and invest in growth areas such as ESS.
LG Energy Solution plans to convert its Michigan plant in the United States for ESS use this year and begin mass production in June next year. It also plans to convert lines at its joint-venture plants in Poland and Canada for ESS and mass-produce LFP batteries.
A company official said, "A standardized product lineup that can respond flexibly to market conditions and differentiated global manufacturing capacity are our core competitiveness," adding, "We will concentrate resources on future growth drivers such as ESS to build a robust business structure that is not swayed by external variables."