South Korean battery manufacturer LG Energy Solution Ltd. announced the mutual termination of a supply contract with U.S.-based battery pack producer Freudenberg Battery Power System (FBPS) LLC, valued at 3.9 trillion won ($2.69 billion). The decision to cancel the deal was made by FBPS, which is withdrawing from the battery industry, as reported by Yonhap news agency.
LG Energy Solution had initially signed the $2.7 billion agreement with FBPS in April and had already executed $110 million of the contract. This termination follows LG Energy Solution’s recent cancellation of a 9.6 trillion-won battery supply order from Ford Motor Co., signed in the previous year.
Despite the significant contract terminations totaling 13.5 trillion won this month, which represent around half of the company’s 2024 annual sales of 25.6 trillion won, LG Energy Solution reassured that its financial health is expected to be minimally impacted. The company clarified that no additional costs would be incurred due to the terminations, as there were no prior investments in specialized production facilities or research and development projects.
LG Energy Solution expressed its intent to leverage these terminations as an opportunity to strengthen relationships with stable customers and ensure a more secure demand base. Additionally, the company reported a 34.1% year-on-year increase in third-quarter operating profit, primarily attributed to robust sales of energy storage systems (ESSs) in the United States.
