WARSAW, October 15, 2024 – LG Energy Solution (LG ES) has secured its biggest battery deal of the year, partnering with Ford to supply 109 gigawatt-hours (GWh) of batteries for the automaker’s electric commercial vehicles. This long-term agreement, set to run through 2032, marks a significant milestone for both companies as they continue to drive the future of electric vehicles (EVs).
Under this contract, LG ES will supply enough battery power to support the production of over one million electric commercial vehicles. These vehicles will be manufactured at Ford’s Wroclaw plant in Poland, with the batteries being delivered in two phases: 34 GWh between 2026 and 2030, and an additional 75 GWh from 2027 through 2032.
Contract Valued Over $9.5 Billion with Potential for Growth
Industry estimates place the total value of this contract at over 13 trillion Korean won, or approximately $9.5 billion. The value could increase further since LG ES will supply not just battery cells, but also complete battery modules. Battery modules typically command a higher price point than cells alone, as they are more complex. For comparison, the average price of battery cells last year was about $89 per kilowatt-hour, while modules are priced higher.
Originally, part of the battery supply was planned to come from a joint venture between Ford and LG in Turkey. However, due to changing market conditions, the companies decided to source the batteries entirely from LG’s established factory in Poland.
Supplying Ford’s E-Transit and Strengthening Commercial EV Market Presence
The batteries supplied under this agreement will primarily power Ford’s next-generation E-Transit, the electric version of its popular Transit van. The E-Transit has been the world’s best-selling electric light commercial vehicle from 2018 to 2023, particularly dominating the European market, where Ford’s Transit lineup has consistently led sales.
This partnership strengthens LG ES’s position in the electric commercial vehicle market, which is expected to experience rapid growth, especially in Europe. The European electric commercial vehicle market is projected to expand by an average of 36% annually in the coming years, driven by stricter emissions regulations and increasing demand for greener transportation options.
Expanding Collaboration in North America Amid IRA Incentives
Beyond Europe, LG ES and Ford are also expanding their collaboration in North America. Starting in 2025, production of batteries for the Ford Mustang Mach-E will shift from LG’s plant in Poland to its Michigan facility to capitalize on tax incentives provided by the U.S. Inflation Reduction Act (IRA).
This deal with Ford is part of a broader trend for LG Energy Solution as the company continues to secure major contracts across the global EV industry. Earlier this month, LG ES announced a 10-year agreement to supply 50.5 GWh of batteries to a Mercedes-Benz affiliate starting in 2028, covering North America and other regions.
LG’s New Battery Strategy: Expanding Beyond Production
LG ES recently introduced a new battery strategy, aiming to expand its business beyond just battery production to include the entire value chain. This move is intended to reduce the company’s dependence on the electric vehicle sector and to diversify its revenue streams. The company has set ambitious financial and strategic goals, targeting a doubling of turnover by 2028 compared to 2023 levels.
Despite its broader strategic aims, LG ES remains committed to its key partners. The long-term supply deal with Mercedes-Benz is one such example, as it focuses on both North America and other regions.
Ford, meanwhile, is ramping up its production capacity in Europe, including its Ford Otosan plant in Turkey, where it manufactures the Transit Custom and Tourneo Custom models. Additionally, Ford is planning to establish its own battery assembly plant in Romania and has signed a letter of intent to build a factory in India.
