LG Energy Solution, Ford, and Koç have signed a memorandum of understanding to establish a joint venture for electric vehicle battery production.
The three companies plan to construct a battery plant with an initial capacity of approximately 25 GWh near the Başkent region in Ankara, Turkey, aiming for mass production by 2026, and will negotiate future plans to expand to 45 GWh.
The batteries produced through this joint venture are primarily intended for Ford’s commercial vehicles, which already hold a strong market leadership position in Europe and North America.
Ford and Koç established a joint company called ‘Ford Otosan’ in Turkey, which currently produces 450,000 commercial vehicles per year, with a substantial portion sold in the European market.
This joint venture initiative is rooted in LG Energy Solution’s future strategy to firmly secure leadership in the rapidly growing European electric commercial vehicle market and Ford’s mutual interests in obtaining a stable supply of competitively strong batteries in terms of quality and performance.
Currently, LG Energy Solution has secured a world-class annual production capacity of 200 GWh and stands out as the only company with production lines established in six countries worldwide in both standalone and joint venture forms, ensuring differentiated global production capabilities and product competitiveness. As of the end of last year, LG Energy Solution’s order backlog reached 385 trillion won.
Ford has been a traditional powerhouse in the commercial vehicle market, having maintained its position as ‘the brand selling the most vehicles in the European commercial vehicle market’ for eight consecutive years until last year.
In terms of actual sales, Ford’s representative model, the Transit, has been a ‘best seller,’ ranking first in global LCV (Light Commercial Vehicle) sales for five consecutive years from 2018 to 2022. In Europe alone, it currently sells about 270,000 units annually (as of 2021), with strong market demand expected for the electrified model (E-Transit) that will be equipped with LG Energy Solution’s batteries.
Ford aims to produce over 2 million electric vehicles globally by 2026 and previously announced its electrification strategy named ‘Ford Plus,’ declaring investments of over 30 billion dollars by 2030 to increase the share of electrified vehicles in new car sales to 40%.
An LG Energy Solution representative stated, “This joint venture initiative is expected to further solidify LG Energy Solution’s market leadership in Europe,” adding that “Ford will also be able to enhance its partnership with LG Energy Solution, which has proven quality and production capabilities, thus improving the ‘stability of battery supply,’ which is an essential element of its electrification transition plan.”
LG Energy Solution began supplying its first electric vehicle batteries to Ford in 2011 and has steadily increased its supply volume each year.
Last July, following the expansion of sales for Ford’s popular electric vehicle models Mustang Mach-E and the electric commercial vehicle E-Transit, LG announced plans to double the production line for Ford batteries at its Polish plant and will continue to expand sequentially thereafter.
LG Energy Solution CEO Kwon Young-soo remarked, “LG Energy Solution’s unmatched global production experience, investment capabilities, and differentiated product competitiveness have been the secret to maintaining a long partnership with Ford,” adding, “We will further enhance our leading customer value capabilities and solidify our collaboration with Ford and Koç to accelerate the electric vehicle transition in Europe and build a sustainable future.”
Lisa Drake, Ford’s Vice President of Electric Vehicle Industrialization, stated, “Ford continues to strengthen its electric vehicle transition plans to lead the future electric vehicle revolution, and we are fulfilling our commitment to producing batteries near our electric vehicle production sites,” articulating the intent to establish a solid production base in partnership with LG Energy Solution and Koç for the growing European electric vehicle market.
Koç stated, “This substantial investment is believed to play a significant role in overcoming this period of national disaster,” and expressed the intention to expand investment facilities in collaboration with these two global companies to ensure Turkey has a competitive edge in the global automotive sector.
Meanwhile, LG Energy Solution plans to elevate its global production capacity to 300 GWh this year through proactive global capacity expansion initiatives, with a focus on four key tasks: enhancing product competitiveness, implementing smart factories, establishing SCM systems, and preparing for the future, thereby providing differentiated customer value.
To achieve this, LG will increase its facility investments by over 50% compared to last year and aims to boost its annual revenue by more than 25-30%.
Lee Sang-jin daedusj@autodiary.kr