Summary
- LG Energy Solution will start making batteries for the Ford Mustang Mach-E in the U.S. next year
- Moving battery manufacturing to the U.S. will allow the Mach-E to regain federal tax credit eligibility
- LGES reached an agreement with Ford to move battery production from Poland to Michigan starting in 2026
- The Mach-E lost federal tax credit eligibility when battery sourcing rules changed this year
- The Ford Mustang Mach-E is currently the most popular non-Tesla EV in the U.S.
Article
LG Energy Solution and Ford Agreement
LG Energy Solution and Ford have reached an agreement to move production of the batteries for the Ford Mustang Mach-E from Poland to Michigan, starting next year. This move is significant as it will help the Mach-E to regain federal tax credit eligibility. Previously, the Mach-E batteries were made in Poland, while the car itself was manufactured in Mexico. The shift to U.S.-made batteries will likely have a positive impact on the federal tax credit status of the Mach-E.
Battery Production Expansion
LG Energy Solution expects to produce 109 gigawatt hours of batteries for Ford’s electric vans starting in 2026. The batteries for the Mach-E will be manufactured in a Michigan plant, which should help the electric crossover to once again qualify for federal tax credits. This change is a result of the stringent battery sourcing requirements implemented by the U.S. Treasury earlier this year. The requirements mandate that a certain percentage of the battery’s critical minerals must be sourced from North America or countries with free trade agreements with the U.S.
Tax Credit Implications
As a result of the change in battery sourcing rules, the Mach-E no longer qualified for the federal tax credit. However, with the shift to locally-made batteries, the car is expected to once again be eligible for the tax credit, which can be up to $7,500. The 2025 model of the Mach-E is reportedly cheaper by $3,500, although it is unclear if this price drop is directly linked to the local battery manufacturing agreement with LG Energy Solution.
Implications for the EV Market
Despite losing federal tax credit eligibility earlier this year, the Mustang Mach-E continues to be one of the most popular non-Tesla electric vehicles in the U.S. It was the fourth best-selling EV in the third quarter, trailing behind the Tesla Cybertruck. The new agreement between Ford and LG Energy Solution provides opportunities for both companies to take advantage of federal incentives, such as the Advanced Manufacturing Production Credit under the Inflation Reduction Act.
Expansion of Battery Production in North America
The partnership between LG Energy Solution and Ford is part of a broader trend towards expanding battery production in North America. The region is quickly becoming the world’s fastest-growing battery manufacturing hub. LGES is involved in joint venture projects with Honda in Ohio and Georgia to supply batteries for various electric vehicles. This increased focus on local battery production is expected to support the growth of electric vehicles and contribute to the transition towards sustainable transportation.
Conclusion
The agreement between LG Energy Solution and Ford to move battery production for the Ford Mustang Mach-E to the U.S. is a significant development in the electric vehicle industry. The shift to locally-made batteries will help the Mach-E regain federal tax credit eligibility and align with the stringent battery sourcing requirements. This move not only benefits Ford and LGES but also contributes to the expansion of battery production in North America, supporting the growth of the electric vehicle market and the transition towards sustainable transportation.
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