EV batteries: OEMs cut investment due to lower demand
Automakers are facing a costly re-set as EV production lags behind expectations, with battery cell joint ventures dissolving and investments scaled back
EV production volumes have fallen so far behind expectations that vehicle companies’ financial results are now being severely impacted by write-offs. AMS has reported that the “re-set” which vehicle companies are now facing has already cost $60 billion. This may well be an understatement as further losses due to poor EV volumes in future years seem all but certain.
The Great $60bn EV Reset: Analysis
Why OEMs & Tier suppliers are having to roll-back, retrench, and recalibrate their EV investments
Re-evaluating the EV battery supply
It is not just at the vehicle companies where low EV volumes are having an impact; the EV supply chain, especially in battery cell production, also faces a far less assured future than anticipated. Several vehicle companies are exiting joint ventures with battery suppliers or cutting back on planned investments in battery production. The sums which had been planned for supply chain investment also run into several billion dollars or euros; the financial viability of some battery suppliers will be severely stretched in the medium term.
Battery joint ventures being dissolved, investment cut
The impact of the EV market not meeting expectations started to become clear for suppliers last year. In August, Porsche announced it would close its Cellforce battery unit costing Porsche at least €300m; Porsche’s decision to close its battery unit had a direct impact on Grob Werke, which had hoped the Porsche facility would be a flagship facility for its battery cell equipment business line. And then in December 2025, Ford and its Korean partner, SK On, dissolved their US battery joint venture, Blue Oval SK. This was established in September 2021, with a planned investment of US$11.4 billion, to build three battery factories, one in Tennessee and two in Kentucky. These factories were due to produce 120 GWh of battery cells, capable of powering up to 1.2m vehicles a year. The facilities were originally due to make NMC (nickel manganese cobalt) cells, but Ford wants to switch to using cheaper LFP (lithium iron phosphate) units.
...in the two years leading up to the government loan being completed Ford had lost almost as much money on EVs as the government was preparing to loan the joint venture
The Kentucky plants will now be owned and run by Ford, to supply some of Ford’s remaining demand and supply the non-automotive energy storage systems (ESS) market. Meanwhile, SK On is retaining the Tennessee factory, which will still supply Ford with batteries. SK is also converting its Tennessee plant – and another factory which it owns in Georgia – to make LFP cells.
The Ford-SK On joint venture had been largely funded by a US$9.6 billion loan from the US Department of Energy. This facility was the largest loan granted under the Biden administration programmes to support the development of the EV sector. However, Ford’s electric division, Model e, lost US$5.1 billion in 2024; this followed a US$4.7 billion loss in 2023. In other words, in the two years leading up to the government loan being completed Ford had lost almost as much money on EVs as the government was preparing to loan the joint venture. And then in 2025, Ford’s Model e unit announced a loss of a further US$4.8 billion.
Meanwhile in Europe, where its business is much smaller than in the US, Ford has also ended its battery supply arrangement with another Korean company, LG Energy Solutions. Ford had been sourcing batteries for the Mustang Mach E (which is made in Mexico) from LG in Poland; sourcing has now switched to an LG plant in Michigan. LG Poland was also due to supply batteries for Ford’s expanding electric LCV range in Europe – this supply arrangement too has been cancelled.
OEMs look to reassert control of mixed powertrain output
Elsewhere Honda is buying out LG from the two companies’ joint venture battery plant in Ohio in a transaction worth US$2.8 billion. This JV had been announced in August 2022 and involved a total investment of US$3.5 billion. The JV was due to make batteries for electric Hondas and Acuras starting production this year. Honda’s decision to buy LG’s stake is intriguing because Honda is simultaneously boosting hybrid vehicle production for which battery needs are much smaller. Honda last year announced it would reduce its global EV investments by more than US$20 billion through to 2030 as it focuses on hybrids. Press reports suggest that the Honda-controlled facility will now switch, at least in part, to making batteries for the ESS market.
The break-up of joint ventures between the car companies and battery cell companies in North American is not surprising but the decision by the vehicle companies to supply the ESS market is somewhat surprising as this is outside their core business
Honda’s decision to take control of the battery JV in Ohio has been followed by the news that the company is writing off US$1.7 billion owing to poor performance of EVs. It has also announced that it will end its fuel cell partnership with GM; the Japanese company will, however, continue to develop fuel cells on its own. Honda’s powertrain strategy appears to be one of taking control of multiple powertrain technologies so that it is ready for whatever direction the market ends up taking. This is similar to Toyota which has retained ICE and hybrid powertrains and their development, as well as fuel cells, alongside EV investments.
Stellantis too is heavily revising its battery plans. It has cancelled two factories – in Germany and Italy – which it had planned for its ACC battery cell joint venture. ACC has already opened a cell factory in France and Stellantis will source its cell needs from this plant (which will also supply some cells to Mercedes) and from a new LFP cell plant in Spain. This will be a joint venture between Stellantis and CATL of China.
Meanwhile in the US, Stellantis is understood to be close to announcing its withdrawal from a North American battery JV with Samsung SDI. This follows the news that it has written off around US$26 billion from EV-related investments. Stellantis has already agreed to sell its 49% stake in NextStar Energy in Canada to its partner in this venture, LGES. This was established in 2022, with over C$5 billion invested. This facility will now produce batteries for a reduced number of Stellantis EVs and supply 50GWh to the ESS market.
Diversifying battery applications to support ongoing business
The break-up of joint ventures between the car companies and battery cell companies in North American is not surprising but the decision by the vehicle companies to supply the ESS market is somewhat surprising as this is outside their core business. Ford and Honda have said they will supply the rapidly growing AI market with energy storage batteries which AI data centres need. LG in Korea meanwhile is also looking at making miniaturised battery cells, based on its automotive experience, for use in robots, especially the increasing number of humanoid robots, which factories in automotive and other manufacturing sectors are deploying in increasing numbers. These twists are perhaps the more surprising developments of all following the EV market’s failure to grow as originally hoped for.
