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LGES signs supply agreement with Ford to boost localised battery production

iconOct 15, 2024 22:07
Source:SMM
LG Energy Solution (LGES) has signed a major supply agreement with Ford Motor Company to provide 109 GWh of battery modules for Ford’s electric commercial vehicles in Europe, starting in 2026, with production taking place at LGES's Poland plant. In the US, LGES will produce batteries for Ford’s Mustang Mach-E at its Michigan plant from 2025. SMM believes that

On 15 October, South Korean battery manufacturer LG Energy Solution (LGES) announced the signing of a supply agreement deal with Ford Motor Company. LGES will supply Ford's electric commercial vehicles in Europe with battery modules from its plant in Poland. At the same time, LGES plans to increase cell production at its U.S. plant and supply Ford to take full advantage of tax credit benefits from the federal government's Inflation Reduction Act (IRA).


The parties agreed as follows:

1. From 2026, LGES will supply a total of 109 GWh of batteries for Ford's commercial vehicles in the UK and EU markets. The contract is for a period of 4-6 years. Production will be carried out at the LGES battery plant in Poland.

2. From 2025, the batteries used in Ford's Mustang Mach-E models will be produced at LGES' plant in Michigan in order to benefit from the US tax credit. The LGES plant in Poland will end its supply to the US market during the same period.


CEO David Kim said LGES will secure its leading position in the European and US markets with localised production capacity and create greater value for customers through advanced battery technology.


SMM believes that the relevant agreement between LGES and Ford is an important step for both companies to comply with the localisation of the EV supply chain. For Europe, where the local industry of lithium-ion batteries is currently slow to develop, the move to supply Europe with ‘Made in Europe’ is exemplary. In the US EV market, which is less developed than expected, non-FEOC companies that qualify as ‘Made in America’ are more attractive to automakers that want to take advantage of tax credits. However, it remains to be seen whether the well-developed and inexpensive lithium-ion battery industry in the Far East will be able to have its advantages rebalanced by relevant supportive policies.

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New Energy

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