TLDRs:
- Ford cancels LG battery deal, signaling a shift in EV production strategy.
- $19.5B EV-related charge includes $5.5B cash impact through 2027.
- Factory repurposing focuses on trucks, hybrids, and extended-range EVs.
- Energy storage initiative aims to monetize idle battery capacity.
Ford Motor Company is making headlines on Dec. 18, 2025, after announcing a dramatic pivot in its electric vehicle (EV) strategy.
The automaker confirmed it has terminated a major battery supply agreement with South Korea’s LG Energy Solution (LGES), a move that underscores shifting priorities within Ford’s EV program. The $6.5 billion contract, originally slated to begin in January 2027, will no longer proceed, sending ripples through the supply chain and raising questions about Ford’s production footprint for the late 2020s.
Investors reacted swiftly, with Ford shares falling roughly 2.6% to $13.31. Analysts note that the LGES termination is not just a headline event, it confirms that Ford is scaling back large-volume EV production while reallocating resources toward trucks, commercial vehicles, hybrids, and extended-range electric vehicles (EREVs).
$19.5 Billion EV Charge Explained
Alongside the LG contract termination, Ford reported a $19.5 billion EV-related charge tied to program write-downs and investment adjustments. The company clarified that the actual cash impact will be about $5.5 billion, spread across 2026 and 2027.
The breakdown includes roughly $8.5 billion for cancelled EV programs, $6 billion from a battery joint venture disposition with SK On, and $5 billion in other program-related expenses.
Ford emphasized that these charges are intended to reset the business and place EV operations on a path to profitability by 2029. Analysts interpret the move as a “rip the bandage off” strategy, removing future loss potential upfront, which could stabilize the company’s long-term financial position.
Production Realignment and Factory Changes
Ford is repurposing key manufacturing facilities to reflect the new strategy. The Tennessee Electric Vehicle Center at BlueOval City will be renamed the Tennessee Truck Plant, focusing on “Built Ford Tough” truck production starting in 2029. Similarly, the Ohio Assembly Plant will pivot to building hybrid and gas-powered commercial vans under Ford Pro.
The shift represents a major bet that focusing on higher-margin trucks, vans, and hybrids will protect per-vehicle profits more effectively than pursuing large-scale EV volumes that may not align with market demand. The transition also underscores operational risks, including workforce reassignment and supply chain realignment, which could affect short-term execution.
Batteries for Energy Storage
In a strategic twist, Ford plans to repurpose existing battery capacity in Glendale, Kentucky, to manufacture large-scale energy storage systems. With a $2 billion investment target and deployment plans of at least 20 GWh annually by late 2027, this initiative aims to monetize underutilized EV assets for AI data centers and grid infrastructure.
While not directly a replacement for EV revenue, the move provides a potential new business stream and aligns with broader electrification trends.
Market and Analyst Implications
Analysts remain cautious. Wall Street consensus on Ford stock holds a “Neutral” rating, with price targets ranging around $12–$13 per share. Investors are weighing whether the EV reset, factory repurposing, and energy storage plans will enhance long-term margins or simply acknowledge slower growth realities.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
