The Korea Herald

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LG wins $9.5b battery deal to power over 1m Ford electric vans

By Moon Joon-hyun

Published : Oct. 15, 2024 - 18:04

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Ford's E-Transit electric van (Ford) Ford's E-Transit electric van (Ford)

LG Energy Solution has landed its biggest deal of the year, partnering with Ford to supply 109 gigawatt-hours of batteries for the automaker's electric commercial vehicles through 2032.

Announced on Tuesday, this long-term agreement will see LG providing enough battery power for over a million electric commercial vehicles, all manufactured at the company’s plant in Wroclaw, Poland.

The batteries, expected to be a high-performance ternary pouch type, will be delivered over two periods -- 34 GWh between 2026 and 2030, and another 75 GWh from 2027 to 2032.

Industry estimates value this contract at more than 13 trillion won, or roughly $9.5 billion. And that figure could climb even higher when considering that LG will supply not just battery cells but also complete battery modules, which tend to drive up revenue. For context, the price of battery cells last year averaged about $89 per kilowatt-hour, but modules, which are more complex, command a higher price point.

Originally, some of these batteries were supposed to come from a joint venture between Ford and LG in Turkey. However, due to shifting market conditions, the companies decided to source them all from LG's established factory in Poland.

These batteries will primarily power Ford’s next-generation E-Transit, the electric version of its highly successful Transit van, which has dominated the global commercial vehicle market. From 2018 to 2023, the E-Transit was the world’s best-selling electric light commercial vehicle, and it remains a top choice in Europe, where Ford’s Transit lineup continues to lead sales in the sector.

For LG, this partnership with Ford strengthens its position in the electric commercial vehicle market, which is expected to grow rapidly, especially in Europe. The region’s electric commercial vehicle market is projected to expand by an average of 36 percent annually in the coming years, driven by stricter emissions standards and the push for greener transport.

Looking beyond Europe, LG and Ford are also working together to expand in North America. In 2025, the production of batteries for Ford's Mustang Mach-E will move from LG’s plant in Poland to its Michigan facility to capitalize on incentives provided by the US Inflation Reduction Act.

This Ford deal is part of a broader trend for LG Energy Solution, which continues to secure major contracts across the global electric vehicle industry. Earlier this month, LG 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.