South Korean battery manufacturer LG Energy Solution Ltd. announced on Friday that it has mutually agreed to terminate a major battery supply contract signed in 2024 with a U.S. company.
In a regulatory filing, the company said it has canceled a 3.9 trillion won ($2.69 billion) supply agreement with Freudenberg Battery Power System (FBPS) LLC, a U.S.-based battery pack producer. The decision came after FBPS chose to exit the battery business altogether, according to Yonhap News Agency.
The agreement was originally signed in April 2024, and LG Energy Solution had already delivered about $110 million worth of products under the contract before its cancellation.
This marks the second major contract termination for LG Energy Solution this month. Just last week, the company confirmed the cancellation of a 9.6 trillion won battery supply deal with Ford Motor Co., which had been signed in 2023.
With these two terminations combined, LG Energy Solution has canceled contracts worth 13.5 trillion won in December alone. This amount represents nearly half of the company’s annual sales, which stood at 25.6 trillion won in 2024.
Despite the scale of the cancellations, LG Energy Solution emphasized that the impact on its financial stability will be limited. The company stated that it had not invested in specialized production facilities or dedicated research and development projects for the canceled contracts, meaning no additional costs were incurred.
“We see this as an opportunity to reduce exposure to uncertain customers and focus on securing more stable demand,” the company said.
Meanwhile, LG Energy Solution’s financial performance remains strong. The company expects its third-quarter operating profit to rise 34.1 percent year-on-year, driven mainly by solid demand for energy storage systems (ESS) in the United States.
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For the three months ending in September, operating profit is estimated to have reached 601.3 billion won ($422.8 million), up from 448.3 billion won during the same period last year, according to another regulatory filing.
