- Electric vehicle battery supplier, LG Energy Solution, has announced a series of new agreements with Ford Motor Company, covering both its European and American operations.
- Under the new contracts, LG Energy will supply battery modules from its Poland facility to power Ford’s electric commercial van range across the European Union and the United Kingdom.
- This availability to produce new batteries at its Poland site coincides with battery production for the Ford Mustang Mach-E leaving LG’s Poland factory, with such battery production moving to LG’s Michigan site.
LG and Ford rethink battery production location
Under the new agreements with Ford, LG Energy Solution will supply an estimated total of 109 GWh worth of EV batteries to Ford, destined for their European electric vans. With the assumption that each battery pack in question has a capacity of around 70kWh, this equates to roughly 1.55 million EV batteries. This deal will start in 2026, and is expected to run for between four and six years.
As electric van battery production moves into LG’s Poland facility, production of Mustang Mach-E EV batteries moves out of the same site. LG Energy Solution says the moving of Mustang Mach-E battery production to Michigan will both ‘enhance business efficiency’ and help ‘capitalize on competitive market conditions’, specifically referring to the $7,500 Inflation Reduction Act tax credit that existing Mustang Mach-Es are no longer eligible for – with $3,750 of this credit requiring at least 50% of an EV battery’s critical minerals to come from either the U.S. or a country with a free trade agreement.
Similarly, the other $3,750 of the credit comes from a requirement of 60% of the EV battery components from the U.S. or a free trade agreement country. Poland, where the Mach-E’s batteries are currently produced, does not fall under this criteria, and with this move, it’s expected that future Mach-E models will once again be eligible for the tax credit. This decision by LG and Ford to move production proves that the IRA tax credit is beginning to achieve its primary goal of encouraging more EV-related manufacturing to take place within the U.S.
David Kim, CEO of LG Energy Solution, commented:
“These agreements attest to our experience and expertise in powering commercial vehicles with innovative battery technologies designed to handle extreme user environments. Capitalizing on our local production capacity, we will secure leadership in the European market and deliver unmatched values to our customers through advanced battery technologies that effectively address diverse needs.”
The move also comes with just one week to go until the presidential election. If Harris wins, she seems unlikely to rescind this mentioned IRA EV tax credit, where the threshold of EV battery minerals and components coming from the U.S. will need to rise each year. This policy was introduced under her current administration with Biden. Trump, on the other hand, has expressed interest on taking tariffs against foreign EVs further – and is likely to maintain or increase tariffs against Chinese-made EVs introduced in the Biden-Harris administration. He’s also threatened higher tariffs against vehicles imported from Mexico – where the Mustang Mach-E assembly currently takes place. The moving of Mach-E battery production into the U.S. could be a useful bargaining tool, if that Mexican tariff was to be considered.
