SEOUL – LG Energy Solution (LGES), South Korea’s leading battery manufacturer, is grappling with a series of major setbacks as its large-scale supply contracts continue to collapse. Following a massive cancellation by Ford earlier this month, the company announced on December 26 that a 4 trillion won ($2.8 billion) deal with FBPS has also been terminated, bringing the total value of lost orders this month to approximately 14 trillion won.
According to a public filing, LGES terminated its agreement to supply 19GWh of electric vehicle (EV) battery modules to FBPS, a subsidiary of the German Freudenberg Group. The decision stems from FBPS's sudden exit from the battery business amid growing uncertainty in the global EV market. The original contract, signed in April last year, was intended to supply batteries for commercial vehicles such as electric buses and trucks in the North American market. Excluding the volume already delivered, the remaining portion of the contract is valued at roughly 3.92 trillion won.
This marks the second major blow for LGES in December. On December 17, Ford scrapped a 9.6 trillion won supply deal after canceling plans for its next-generation electric pickup trucks and commercial vans. With more than 14 trillion won in orders vanishing in less than two weeks, industry analysts express concern over the company’s mid-to-long-term production schedules and factory utilization rates.
Despite the "mega-shock," LG Energy Solution maintains that the direct financial impact will be manageable. Unlike dedicated supply deals that require massive investments in customized production lines, the FBPS contract involved "standardized products" manufactured on existing lines.
"Since no dedicated facility investment or customized R&D costs were incurred for this specific contract, there are no immediate investment losses or additional costs resulting from the termination," a spokesperson for LGES stated. "We view this as an opportunity to phase out uncertain clients and focus on securing more stable and high-demand partners."
However, experts suggest that the series of cancellations reflects a broader slowdown in the global EV transition. LGES now faces the challenge of reconfiguring its global production strategy to mitigate the impact of the cooling market and ensure long-term profitability.
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