South Korean battery giant LG Energy Solution (LGES) confirmed on Friday that it has mutually agreed to terminate a 2024 supply contract with U.S.-based Freudenberg Battery Power System (FBPS). The regulatory filing reveals the canceled deal was worth 3.9 trillion won ($2.69 billion). The termination was initiated because FBPS has decided to withdraw entirely from the battery sector. Prior to this cancellation, LG Energy Solution had already implemented approximately $110 million of the agreement, which was originally signed in April 2024 to provide battery packs.
Double Blow: Ford Motor Co. Cancels $7 Billion Order
The FBPS announcement comes just one week after LG Energy Solution revealed the termination of a massive 9.6 trillion-won battery supply order from Ford Motor Co. The Ford contract, signed last year, represented a cornerstone of the company’s U.S. expansion strategy. Its loss adds significant pressure to the manufacturer’s short-term order backlog. With both cancellations combined, LG Energy Solution has seen 13.5 trillion won ($9.3 billion) in contracts vanish within a single month, a staggering figure for the industry leader.
The Scale: Half of Annual Sales Evaporate in 30 Days
The total value of these terminated contracts represents roughly 50% of the company’s total 2024 annual sales, which stood at 25.6 trillion won. While the headline figure is substantial, LG Energy Solution maintains that these cancellations will have a “limited impact” on the company’s overall financial health and liquidity. The company noted that it had not yet committed to specific production facilities or major R&D expenditures for these deals, meaning no additional “sunk costs” or penalties were incurred.
Strategic Shift: Streamlining the Customer Portfolio
LG Energy Solution views this period of volatility as an opportunity to “cleanse” its order book. By ending ties with uncertain partners, it can refocus resources on stable, high-value demand. “We intend to take this as an opportunity to streamline relationships with uncertain customers and secure more stable sources of demand,” the company stated in its official filing. The pivot suggests a broader trend in the EV industry: moving away from aggressive volume projections toward high-certainty partnerships as the global market enters a more cautious growth phase.
