Even though EV sales continue to rise, demand has thus far fallen short of expectations, regardless. This phenomenon recently prompted Ford to scale back a substantial number of investments into a variety of its under-construction EV battery plants – including operations at its BlueOval SK Battery Park and BlueOval Battery Park Michigan facilities – cancel plans to build a joint-venture EV battery plant in Turkey, and scale back 2024 Ford F-150 Lightning production. Now, this faltering demand is also impacting Ford EV battery partners SK On and LG Energy, according to Automotive News.
Thus far, LG Energy Solution (LGE) has announced that it plans to lay off 170 workers at its plant in Michigan, while fellow supplier and Blue Oval joint venture partner SK On has already laid off more than 100 workers at its Georgia-based battery plant. According to Gabe Daoud, an analyst at TD Cowen, these cuts stem from automakers that have “either paused or pulled back on EV-related spending, and that’s trickling down into the supply chain and in particular the battery segment.”
Along with Ford, several other automakers have announced plans to scale back or delay planned EV production and new model rollouts, a list that includes the company’s cross-town rival, General Motors. While investments in electrification remain strong, LG noted that “automakers realigning the speed of the EV transition” is precisely what led it to lay off workers, just as EV sales rose by 50 percent in Q3 2023, year-over-year, a number that represents a bit of a slowdown over the 68 percent increase EVs posted in Q3 2022 versus 2021.
“We do see that that growth is certainly still happening, and the question is how fast it will happen,” said Stephanie Brinley, an analyst at S&P Global Mobility. “It’s a level of flexibility that the industry has to work with, and it’s very difficult because that’s money; that’s investment; that’s going to be some company having some level of loss.”