Western OEMs Are Restructuring Their Battery Bets
Is it a pattern?
Summary
Some Western Automakers are Reducing Battery Investments.
Battery Industry Pulse: weekly roundup.
Some western automakers are restructuring their battery manufacturing strategies after the first wave of EV expansion proved more expensive than expected.
GM fired the first shot on December 2, 2024. It said it would sell its stake in the Ultium Cells plant in Lansing, Michigan, to LG Energy Solution. The Korean company completed the takeover in May 2025.
GM still keeps its position in the Ultium Cells JV behind the Ohio and Tennessee plants, but it steps away from owning this third site.
Then the pattern kept repeating, just not all in the same fortnight.
In December 2025, Ford and SK On decided to end their BlueOval SK joint venture structure and split responsibilities. Ford keeps control of the two Kentucky plants. SK On takes the Tennessee plant.
The supply relationship continues, but the ownership and the pain move around.
In December 2025, Handelsblatt reported Volkswagen would cut PowerCo’s five-year budget from €15 billion to below €10 billion, with sources describing a “mid-single-digit billions” plan.
VW is slowing PowerCo, resizing it, and pushing it into a shape the parent company can afford while fighting battles elsewhere.
Call it what it is. OEMs are trimming their battery manufacturing ambitions to match financial reality.
The numbers explain the pressure
Ford’s EV business is bleeding cash. Model e lost about $5.1 billion in 2024 after losing about $4.7 billion in 2023. Guidance has pointed to another year of multi‑billion-dollar losses.
CEO Jim Farley put the margin problem in plain language. In combustion vehicles, bigger often means fatter margins.
Ford’s combustion business still covers the EV losses. But public markets do not hand out trophies for “we will be profitable in 2028.” They ask how long the cash engine lasts.
GM missed its 2024 goal to produce and wholesale 200,000 EVs in North America. It finished the year at about 189,000 on a wholesale basis. That is not a disaster, but it is not the demand curve investors were sold in 2021.
The Lansing stake sale does two things at once. It helps GM recover capital while keeping the batteries. LG Energy Solution owns and runs the plant. GM stays a customer.
Volkswagen is juggling too many expensive projects at the same time. It is cutting jobs and pushing a broad cost program.
In China, VW is under heavy pressure from local brands. VW reported 2024 deliveries in China fell 10% amid a fierce price war, and Reuters has described China price cuts and costs as central to VW’s crisis.
PowerCo was meant to lock in VW’s battery future. Today it competes with many other priorities for capital. As a result, the ramp is slowing.
Different companies, same logic. When the EV P&L is red, and shareholders want dividends, the long payback projects get trimmed first.
Why scaling back makes sense, right now for them
Battery prices have been falling due to a lot of capacity coming online, especially in China and metal prices have decreased.
Lithium prices are down about 80% from late 2022 levels.
When batteries get cheaper and easier to source, the urgency to build your own capacity drops.
Why commit billions in fixed costs when you can buy cells from specialists with better yields, deeper process discipline, and lower cost structures?
From a CFO’s chair, trimming battery capex while securing long-term supply agreements looks rational.
GM still gets batteries from Lansing. LG Energy Solution just owns and operates the site.
Ford still gets batteries from Tennessee. SK On runs it without Ford sharing ownership losses.
VW still talks about the unified cell. It still has projects in Europe and North America. But the pace and the funding are being pulled back to something the group can carry.
The short-term logic is clean.
Cash is protected. Losses stop compounding. Supply continues. Capital can be redirected to product refreshes, software, and the combustion programs that still fund the business.
What this misses
Battery prices are falling today. That can change.
If EV adoption accelerates faster, pricing power returns. If trade frictions rise, landed costs change overnight. If a new technology pivot arrives, cell designs may need to move fast.
In all three cases, being dependent on outside suppliers becomes riskier.
Scaling back now also slows learning.
Cell production teaches lessons that do not show up in contracts or slide decks. You learn them on the factory floor, through yield losses, quality escapes, late design changes, and the cost of fixing them.
When OEMs step away from ownership, they give up that experience and the competence that comes with it.
BYD controls its battery supply chain far more tightly than most Western OEMs. Tesla built deep cell know-how while keeping multiple supply partners.
Neither treated batteries as a line item to outsource when the numbers looked ugly.
Western OEMs are prioritizing near-term financial stability while keeping access to battery supply through partners.
The trade-off is less direct control over factories and learning, in exchange for lower capital risk and more flexible sourcing.
The shareholder problem
Large public companies have a built-in tension.
Shareholders want near-term returns. Battery manufacturing asks for patient capital and a tolerance for years of losses before the curve bends.
Ford’s board looks at billions in annual EV losses and asks when it turns. Management can promise a plan, but it cannot promise demand.
Volkswagen’s governance adds another layer. Dividends matter. Expensive internal ventures that threaten payouts attract pushback.
Public markets do not reward ten-year battery programs. They reward cash flow and margin recovery.
The incentives push “leaders” toward quarterly decisions, even when the long-term price is obvious.
What Asian competitors know
While Western OEMs adjust, Asian battery makers keep expanding.
LG Energy Solution ends up with more control of a U.S. plant while preserving a major customer relationship.
SK On gets clearer operational control of Tennessee while keeping Ford as a key offtaker.
Chinese battery makers continue building in Europe. CATL is already operating in Germany. EVE Energy has been building in Hungary to supply BMW.
These companies act like batteries are not a commodity you outsource and forget. They treat them as a core determinant of EV cost, performance, and pace of model iteration.
BYD’s vertical integration works because it has been committed through the hard years. It did not wait for perfect margins before building competence.
Western OEMs, by contrast, ramped up capex during peak hype and pulled back when the ramp got expensive.
What battery professionals should expect
The next 12 months will show whether this pullback is temporary or structural.
More likely, Western OEMs will keep a thinner level of battery manufacturing. Enough to satisfy local content rules and reduce risk, but not enough to chase full vertical integration.
Three implications for the battery industry.
First, OEMs are not reliable partners for aggressive capacity expansion. They commit during boom narratives and pull back when losses mount.
Second, the execution gap widens. Korean and Chinese battery makers keep stacking process discipline and scale, while Western players are slow learning.
Third, Western battery independence remains partial. Governments can subsidize plants, but they cannot force boards to fund them aggressively when dividends and margins come first.
These decisions are driven by real pressure. Shareholders want returns. Executives need to show progress. Trimming capex while keeping supply through reworked partnerships solves the immediate problem.
But it also walks back the strategic story that batteries were essential to control.
Battery prices are low today. That is not a promise about tomorrow.
When supply tightens, when geopolitics shifts trade flows, or when technology pivots demand faster redesign cycles, OEMs that slowed down will have less room to maneuver.
They are buying quarterly relief with long-term dependence.
And the bill, when it shows up, usually arrives as lost market share and a supply chain that suddenly feels less negotiable.
Now, let’s look at this week's battery market developments.
Battery Industry Pulse: Weekly Roundup
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I notice all the examples are in the automotive sector. I'm wondering if anything similar is happening in the BESS field, and look forward to hearing from you on that.
"If EV adoption accelerates faster, pricing power returns. If trade frictions rise, landed costs change overnight..."
EV adoption is not accelerating; quite the opposite in the US.
Trade frictions are probably at a peak with the tariff situation - I don't think it likely to get much worse.