South Korean battery manufacturer LG Energy Solution (LGES) has terminated its 2.7-billion-US-dollar supply contract with Freudenberg Battery Power Systems (FBPS) ahead of schedule. According to a mandatory disclosure, the decision is based on Freudenbergʼs withdrawal from the battery business.
Battery modules for commercial vehicles
FBPS is a subsidiary of the German Freudenberg Group and operates a battery pack assembly plant in Midland, Michigan. The facility is located in close proximity to LGʼs cell production sites. LGES was set to supply battery modules that Freudenberg would further process into packs for North American commercial vehicle manufacturers. According to LGES, no project-specific investments or development costs were incurred for the contract.
Elimination of US government subsidies
LGʼs decision to withdraw from the contract comes amid a market environment characterized by declining demand for electric vehicles and changes in the political landscape in the United States. The elimination of government subsidies, particularly a 7,500-dollar tax credit per vehicle, is prompting many manufacturers to reduce their electric mobility activities.
