FBPS Withdraws from Business... Total Cancellations Reach 13.5 Trillion Won Including Ford
"No Investment Losses... Opportunity to Secure New Clients"
LG Energy Solution is terminating a contract worth 3.9 trillion won with FBPS (Freudenberg Battery Power System), a U.S. battery pack manufacturer.
On the 26th, LG Energy Solution announced in a regulatory filing that it will mutually terminate the electric vehicle battery module supply contract signed with FBPS in April last year, following FBPS's withdrawal from the battery business.
On the 10th, LG Energy Solution headquarters on Yeouidaero, Yeongdeungpo-gu, Seoul. Photo by Jinhyung Kang aymsdream@
The termination amount, based on the exchange rate as of the disclosure date, is 3.9217 trillion won. This represents the remaining portion of the total contract value (2.795 billion dollars, approximately 4.04 trillion won) from April last year through the end of 2031, excluding the amount already fulfilled (110 million dollars, approximately 160 billion won).
The company explained that the final amount may change depending on future due diligence and exchange rate fluctuations.
FBPS is a company under the German Freudenberg Group and operates a gigafactory for pack assembly in Midland, Michigan, USA.
At the time of the contract, FBPS had announced plans to assemble packs using battery modules supplied by LG Energy Solution and sell them to major commercial vehicle manufacturers in North America, such as large buses and electric trucks. However, recent reports have indicated that FBPS is considering withdrawing from the battery business.
On the 17th, LG Energy Solution also announced the termination of a contract with U.S. automaker Ford to supply electric vehicle battery cells and modules worth 9.6 trillion won from 2027 to 2032.
Including the terminated contract with Ford, contracts totaling 13.5 trillion won have been canceled within just over a week. This amount exceeds half of LG Energy Solution's sales of 25.62 trillion won last year.
Nevertheless, LG Energy Solution stated that despite the decrease in order backlog, the financial impact would be limited.
LG Energy Solution said, "Since there were no investments in dedicated facilities or customized research and development (R&D) costs, there will be no investment losses or additional expenses resulting from the contract termination," adding, "We will take this as an opportunity to streamline uncertain clients and secure more solid demand sources."
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