Dive Brief:
- Ford Motor Co. and LG Energy Solution have agreed on several terms that will help the automaker secure and optimize its battery supply for years to come, the battery manufacturer announced in an Oct. 15 press release.
- In Europe, LG Energy Solution will supply Ford with an estimated 109 gigawatt hours of batteries for its commercial EVs beginning in 2026 as part of a contract ranging from four to six years.
- The two companies also announced that battery production for the current Mustang Mach-E will move from LG Energy Solution’s factory in Poland to its U.S. facility in Michigan in 2025, allowing Ford to meet the battery sourcing requirements of the Inflation Reduction Act and be eligible for a tax credit.
Dive Insight:
Ford’s supply deal with LG Energy Solution will help it meet tougher battery sourcing requirements for the EVs it sells in Europe and the U.K. But it will also help LG Energy Solution expand its own battery manufacturing capacity in the EU as it looks to become a global leader in a circular battery ecosystem.
"Capitalizing on our local production capacity, we will secure leadership in the European market and deliver unmatched values to our customers through advanced battery technologies that effectively address diverse needs,” said David Kim, CEO of LG Energy Solution, in the release.
The European Commission adopted new regulations that took effect in August 2023 to ensure that batteries in EU countries are collected, reused and recycled. In the future, batteries must also have a minimum amount of recycled content, a low carbon footprint, use fewer harmful materials and critical raw materials from non-EU countries. However, LG Energy Solution is already taking steps to ensure compliance with EU battery regulations, according to a July 2024 press release.
Along with Ford, other automakers are also entering into strategic agreements to establish U.S. battery supply chains in order to qualify for the New Clean Vehicle Tax Credit of up to $7,500 on EVs. LG Energy Solution also announced last year it was investing $3 billion in its battery production facility in Michigan as part of a separate agreement to supply lithium to Toyota Motor Corp. that will be used in batteries for its U.S.-built EVs.
Qualifying for the credit could give Ford and other automakers a competitive edge in the growing EV market. In August, Ford announced its plan to produce batteries for the Mach E at LG Energy’s facility in Holland, Michigan.
Outside of its supply deal with LG Energy Solution, Ford also intends to increase U.S. battery production via its BlueOval SK joint venture with battery maker SK On. The battery plant in Kentucky will manufacture cells for the current E-Transit with enhanced range and F-150 Lightning pickup beginning mid-2025.
Ford also announced in August that lithium iron phosphate battery production is on track to start in 2026 at its BlueOval Battery Park Michigan. Ford says it's the first automaker-backed LFP battery plant in the U.S. and will produce the lowest-cost battery cells in North America.
