LG Energy Solution Ltd. announced Friday it has mutually terminated a ₩3.9 trillion ($2.7 billion) battery supply contract with Freudenberg Battery Power Systems, after the U.S.-based company decided to abandon the battery industry entirely.
The cancellation marks the second major order loss for the South Korean battery maker this month. Just nine days earlier, Ford Motor Co. scrapped a ₩9.6 trillion ($6.6 billion) supply agreement. The combined terminations total ₩13.5 trillion ($9.3 billion), equivalent to roughly half of the company’s 2024 annual revenue of ₩25.6 trillion.
Freudenberg, which acquired Michigan-based XALT Energy in 2023 with plans to expand, is now shuttering its Auburn Hills and Midland operations. The German conglomerate’s subsidiary cited declining demand for heavy-duty electric and hybrid vehicles in North America. Approximately 324 workers face layoffs through June 2026.
LG Energy Solution sought to minimize investor concerns, stating it had not constructed dedicated production facilities or incurred research expenses specific to the Freudenberg contract. The company had implemented only $110 million of the deal signed in April 2024.
The rapid deterioration of orders underscores broader challenges facing battery manufacturers as automakers scale back electrification timelines. LG Energy Solution indicated it would use the cancellations to concentrate on customers with more stable demand profiles.
