Core Viewpoint - LG Energy Solution Ltd (LGES) has had its battery supply contract with Ford Motor Company, valued at KRW 9.6 trillion (US$ 6.5 billion), canceled due to Ford's strategic shift in electric vehicle (EV) production and demand forecasts [1][2]. Group 1: Contract Cancellation - Ford has notified LGES of the cancellation of a contract for the supply of 109 gigawatt-hours (GWh) of nickel-cobalt-manganese (NCM) batteries, originally intended for Ford's light commercial vehicles (LCVs) from 2026 to 2032 [1]. - The cancellation is attributed to Ford's decision to discontinue certain EV models in response to recent policy changes and shifts in EV demand forecasts [2]. Group 2: Ford's Strategic Shift - Ford announced a US$ 19.5 billion one-off charge as part of its efforts to reshape its EV strategy, which includes pulling back from larger battery electric vehicle (BEV) models and focusing on hybrids and extended-range vehicles [2][3]. - The company aims to align its capital spending with customer demand and higher-return opportunities, targeting profitability for its Model e EV unit by 2029, with expected yearly improvements starting in 2026 [3]. Group 3: Leadership Statements - Ford's president and CEO, Jim Farley, emphasized that the changes are customer-driven, aimed at creating a stronger, more resilient, and profitable Ford [4]. - Farley noted that the operating reality has changed, prompting the redeployment of capital into higher-return growth opportunities [4].

Core Viewpoint - Ford plans to book approximately $19.5 billion in special items as it reshapes its electric vehicle (EV) strategy, focusing on hybrids and extended-range vehicles while pulling back from larger battery models [1] Group 1: Financial Implications - The charges related to the changes under the Ford+ plan will primarily occur in the fourth quarter of 2025, with some recognized in 2026 and 2027 [2] - The company anticipates around $5.5 billion of the total to be cash outflows, mainly in 2026, with the remainder in 2027 [2] Group 2: Strategic Shift - The moves aim to align capital spending with customer demand and higher-return opportunities, targeting profitability for the Model e EV unit by 2029, with expected yearly improvements starting in 2026 [3] - Ford's president and CEO emphasized that this is a customer-driven shift to create a stronger and more profitable company [3] Group 3: Operational Changes - Ford will abandon plans for certain larger fully electric vehicles due to weaker-than-expected demand, high costs, and regulatory changes, prioritizing affordability, choice, and profits [5] - The company intends to broaden powertrain options, focusing on hybrids and extended-range electric propulsion, while future pure EV development will concentrate on a new Universal EV Platform for smaller, more affordable models [6] Group 4: Market Projections - By 2030, Ford expects about half of its global sales volume to consist of hybrids, extended-range EVs, and fully electric vehicles, an increase from an estimated 17% in 2025 [7] - In North America, Ford will focus its EV efforts on the Universal EV Platform, described as low-cost and flexible, with the first vehicle based on this architecture being a fully connected midsize pickup truck scheduled for production in 2027 [7] Group 5: Product Development - The company is revising its strategy for larger trucks and SUVs to meet demand for capability, towing, and range, including the addition of extended-range electric variants [8]