Quick Takeaways
- The termination reshapes long-term EV battery sourcing and signals strategic realignment in the global battery ecosystem.
- Freudenberg’s exit from battery operations directly triggered the collapse of a multi-billion-dollar supply agreement.
LG Energy Solution battery supply contract cancellation with Freudenberg Battery Power Systems has drawn attention across the global electric vehicle supply chain. The decision marks a significant shift in long-term battery sourcing plans and highlights ongoing structural changes within the EV battery manufacturing ecosystem.
South Korean media reports indicate that LG Energy Solution Ltd., the electric vehicle battery arm of LG Chem Ltd., officially ended its battery supply agreement with US-based Freudenberg Battery Power Systems on December 26, 2025. The contract, which originally commenced in April 2024, was scheduled to remain active until December 2031.
LG Energy Solution Battery Supply Contract Cancellation Details
Under the agreement, cumulative sales were projected to reach USD 2.8 billion, reflecting a long-term strategic partnership in EV battery supply. Prior to termination, LG Energy Solution had already executed approximately USD 110 million worth of deliveries, indicating that initial phases of the agreement were operational.
Key commercial aspects of the contract included:
Impact on Freudenberg Battery Power Systems Operations
The LG Energy Solution battery supply contract cancellation follows Freudenberg Battery Power Systems’ strategic decision to withdraw from the battery business. FBPS had been operating a gigafactory in Midland, Michigan, dedicated to battery pack assembly for electric vehicle applications.
With the company exiting battery-related operations, continuing the long-term supply agreement was no longer aligned with its revised business strategy. As a result, the termination reflects broader industry recalibration amid evolving demand, investment priorities, and competitive pressures in EV battery manufacturing.
The development underscores how shifts in downstream battery pack production can directly influence upstream cell supply agreements, particularly in large-scale, multi-year contracts.
South Korean media reports indicate that LG Energy Solution Ltd., the electric vehicle battery arm of LG Chem Ltd., officially ended its battery supply agreement with US-based Freudenberg Battery Power Systems on December 26, 2025. The contract, which originally commenced in April 2024, was scheduled to remain active until December 2031.
LG Energy Solution Battery Supply Contract Cancellation Details
Under the agreement, cumulative sales were projected to reach USD 2.8 billion, reflecting a long-term strategic partnership in EV battery supply. Prior to termination, LG Energy Solution had already executed approximately USD 110 million worth of deliveries, indicating that initial phases of the agreement were operational.
Key commercial aspects of the contract included:
- Contract duration from April 2024 to December 2031
- Total expected contract value of USD 2.8 billion
- Implemented supply value of USD 110 million before termination
Impact on Freudenberg Battery Power Systems Operations
The LG Energy Solution battery supply contract cancellation follows Freudenberg Battery Power Systems’ strategic decision to withdraw from the battery business. FBPS had been operating a gigafactory in Midland, Michigan, dedicated to battery pack assembly for electric vehicle applications.
With the company exiting battery-related operations, continuing the long-term supply agreement was no longer aligned with its revised business strategy. As a result, the termination reflects broader industry recalibration amid evolving demand, investment priorities, and competitive pressures in EV battery manufacturing.
The development underscores how shifts in downstream battery pack production can directly influence upstream cell supply agreements, particularly in large-scale, multi-year contracts.
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