Decoding the EV Battery Boom and Supply Chain Shifts – Mid-December 2025 Analysis

1. Event Overview

1.1 Ford Cancels LGES Battery Deal

• Date: Mid-December 2025

• Details: Ford announced the cancellation of its $6.5 billion EV battery supply contract with South Korea’s LG Energy Solution (LGES), initially scheduled for 2026–27. Additionally, Ford terminated a $11.4 billion joint venture with SK On.

• Implications: This move reflects automakers’ strategic reassessment of EV production lines and investment scale. It creates short-term pressure on battery manufacturers’ orders and upstream raw material demand.

1.2 EV Growth Continues but Battery Metals Face Headwinds

• Date: Dec 19–20, 2025

• Details: Global EV sales grew by ~21% YoY as of November 2025. However, lithium, nickel, and cobalt markets are oversupplied for the third consecutive year, putting price pressure on key battery metals.

• Trends:

  • China is accelerating adoption of LFP (Lithium Iron Phosphate) batteries over high-nickel NCM types.

  • Emerging technologies like sodium-ion batteries are gaining traction.

  • Copper and aluminum remain resilient due to their roles in vehicle electrification and lightweighting.

• Implications: Metal oversupply pressures costs and influences technology selection for battery manufacturers. The EV value chain may undergo medium- to long-term structural changes.

1.3 China Boosts Battery Manufacturing and Exports

• Date: Dec 21, 2025

• Details: China’s power market reforms and data center construction are driving rapid battery production growth. EV and energy storage battery exports are expected to exceed $65 billion in 2025.

• Implications: Reinforces China’s position as a global battery supply chain hub. Demand is driven not only by EVs but also by energy storage and renewable infrastructure.

2. Deep Industry Analysis

1. Automaker Strategic Retrenchment

   • Ford’s move demonstrates cautious EV investment planning amid economic or supply uncertainty.

   • Likely reduces near-term demand for high-nickel NCM batteries and related raw materials.

2. Battery Metals Oversupply

   • Lithium, nickel, and cobalt prices remain under pressure; upstream chemical suppliers may face margin squeeze.

   • Oversupply drives innovation toward alternative chemistries (LFP, sodium-ion) and recycling initiatives.

3. Technological Shift & Diversification

   • LFP and sodium-ion batteries reduce reliance on high-cost metals.

   • Chemical companies need to expand R&D in cathode, anode, electrolyte, and precursor materials.

4. China’s Dominance in the Supply Chain

   • Policy and infrastructure continue to drive China’s battery production.

   • Global players may need secure Chinese supply agreements to remain competitive.

3. Strategic Implications

Dimension	Implication
Short-term Demand	High-nickel battery demand may decrease; metal prices under pressure.
Long-term Opportunity	LFP, sodium-ion, and energy storage materials are growth areas.
Supply Chain	Diversification and flexible sourcing essential; China remains critical.
Chemical & Material Companies	Focus on cathode/anode/electrolyte/precursor innovation; consider recycling strategies.

4. Key Takeaways

• Automakers are strategically adjusting EV investments, affecting battery orders and metal demand.

• Battery metals are oversupplied, prompting cost pressure and innovation toward alternative chemistries.

• China’s policy-driven battery expansion reinforces its central role in the global supply chain.

• Cathode/anode materials, electrolytes, and energy storage chemicals remain growth segments for chemical and material companies.