In the wave of the global automotive industry's transition to electrification, the cooperation between LG Energy Solution and Ford Motor has undoubtedly become a significant symbol and weather vane of this change. Recently, the two companies jointly announced the signing of two battery supply contracts, marking a more in-depth cooperation in the field of electric vehicles. According to the agreement, LG Energy Solution will provide a total of 109GWh of power batteries to Ford over the next four to six years starting in 2026, which will be mainly used for electric commercial vehicles such as Ford's next-generation E-Transit (electric version of the Transit van), helping Ford take a more solid step on the road to electrification.
This partnership is not only a strategic alliance between the two companies, but also an important bet on the future development of the global electric vehicle market. With the increasing global emphasis on environmental protection and sustainable development, the electric vehicle market has ushered in unprecedented development opportunities. In this electric vehicle race, the battery is the core component of the electric vehicle, and its performance and quality are directly related to the range, safety and service life of the electric vehicle. Therefore, cooperating with a battery industry giant like LG Energy Solution is undoubtedly an important strategic choice for Ford.
Figure: LG Energy Solution and Ford signed a 109GWh battery supply agreement
From a technical point of view, LG Energy Solution expects to supply Ford with high-performance ternary pouch batteries. This battery is known for its high energy density, long cycle life and stable chemical properties, and is considered the future development direction of electric vehicle power batteries. Compared with traditional lead-acid batteries and nickel-metal hydride batteries, ternary pouch batteries have higher energy density and better low-temperature performance, which can greatly improve the range and charging efficiency of electric vehicles. As a result, this collaboration will not only elevate the technical level of Ford's electric commercial vehicles, but also promote the further development of electric vehicle technology around the world.
From a market perspective, this cooperation will further strengthen LG Energy Solution's supply position in the global battery market. With the rapid growth of the global electric vehicle market, the demand for batteries is also rising. As one of the world's leading battery manufacturers, LG Energy Solution has been widely recognized for its product quality and technical level. The partnership with Ford will further increase LG Energy Solution's market share in markets such as Europe and North America, and thus occupy a more important position in the global battery market.
In addition, the partnership involves tax credits under the United States Inflation Reduction Act (IRA). Under this policy, manufacturers of certain PV modules, wind energy modules, inverters, and certain related products such as eligible battery modules and critical minerals produced in the United States will receive a certain amount of tax credit. This is undoubtedly additional good news for LG Energy Solution and Ford. By taking advantage of the tax credit, the two companies can reduce production costs and increase profitability, thereby gaining a greater competitive advantage in the global EV market.
However, this cooperation also faces certain challenges and uncertainties. As the growth of the global electric vehicle market slows down and battery demand fluctuates, the market will become more competitive. At the same time, fluctuations in raw material prices may also have an impact on the cost of battery production. In response to these challenges and uncertainties, LG Energy Solution is actively expanding into emerging business areas such as energy storage systems, urban air mobility, battery-as-a-service, and energy-as-a-service. These emerging business areas will not only help LG Energy Solution reduce the risk of dependence on a single market, but also bring new growth points and profit opportunities to LG Energy Solution.
Overall, LG Energy Solution and Ford's battery supply contract is not only an important cooperation between the two companies, but also a microcosm and model of the global automotive industry's electrification transformation. This collaboration will accelerate Ford's electrification journey, strengthen LG Energy Solution's leadership position in the global battery market, and drive further development of global EV technology. With the continuous growth of the electric vehicle market and policy support, we have reason to believe that such cooperation will play an increasingly important role in the future automotive industry and make greater contributions to the cause of global environmental protection and sustainable development.
