Why Was LG Energy Solution's $2.69 Billion Battery Deal with a U.S. Firm Cancelled?
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Synopsis
In a surprising turn of events, LG Energy Solution has canceled its substantial $2.69 billion battery deal with a U.S. firm, following the latter's exit from the industry. This decision comes amidst a series of contract terminations, raising questions about the impact on the company’s financial future. Discover more about this significant development in the battery sector.
Key Takeaways
- LG Energy Solution has terminated a significant deal with a U.S. firm.
- FBPS's exit from the battery industry prompted the cancellation.
- Total contract terminations this month reached 13.5 trillion won.
- The company aims to maintain financial stability amidst these changes.
- Strong sales in the ESS sector are boosting LG's profitability.
Seoul, December 26 (NationPress) - The South Korean battery manufacturer LG Energy Solution Ltd. announced on Friday that it mutually agreed with a U.S. company to terminate a supply contract established in 2024. This decision followed a regulatory filing in which LG Energy Solution revealed the cancellation of a supply agreement valued at 3.9 trillion won ($2.69 billion) with Freudenberg Battery Power System (FBPS) LLC, based in the United States.
The termination was prompted by FBPS's decision to exit the battery sector, according to reports from the Yonhap news agency.
Initially signed in April, the $2.7 billion agreement had already seen the implementation of $110 million of the contract.
Recently, LG Energy Solution also disclosed the cancellation of a 9.6 trillion-won battery supply order from Ford Motor Co., which was signed last year.
With these recent developments, the total value of contracts terminated this month by LG Energy Solution has reached 13.5 trillion won, representing nearly half of the company’s annual sales of 25.6 trillion won projected for 2024.
However, the South Korean battery producer indicated that these cancellations are not expected to significantly impact its financial stability.
“We have not incurred expenses related to building specialized production facilities or research and development projects. Thus, there are no further costs associated with the termination,” the company stated.
“We aim to utilize this situation to streamline relationships with uncertain clients and secure a more reliable demand source,” it added.
In other news, LG Energy Solution’s operating profit for the third quarter is anticipated to have increased by 34.1 percent compared to the previous year, fueled by robust sales of energy storage systems (ESSs) in the United States.
During the three-month period ending in September, the operating profit is projected to have surged to 601.3 billion won ($422.8 million), up from 448.3 billion won during the same timeframe last year, as disclosed in a regulatory filing.
Point of View
The recent cancellations by LG Energy Solution highlight the volatile nature of the battery supply market. The mass termination of contracts not only raises concerns about the company's immediate financial health but also reflects broader trends in the industry. As LG navigates these challenges, it remains crucial for them to focus on securing stable partnerships moving forward.
NationPress
26/12/2025
Frequently Asked Questions
What led to the cancellation of LG Energy Solution's battery deal?
The cancellation was mutually agreed upon as the U.S. firm, Freudenberg Battery Power System, decided to exit the battery industry.
How much was the canceled contract worth?
The canceled supply contract was valued at 3.9 trillion won, which is approximately $2.69 billion.
What impact will this cancellation have on LG Energy Solution?
LG Energy Solution stated that the terminations are not expected to significantly affect their financial health.
Has LG Energy Solution canceled any other contracts recently?
Yes, the company also canceled a 9.6 trillion-won battery supply order from Ford Motor Co. last week.
What is LG Energy Solution's anticipated profit for the third quarter?
The company expects its operating profit for the third quarter to have surged by 34.1% compared to the previous year.
