Ford, LG Electronics, and Koç Holding paused plans for a large European automotive battery plant, halting a project that would have mirrored Volkswagen’s Sagunto giga factory in Valencia. The proposed facility, planned for Turkey, was put on hold as Europe’s EV uptake lagged behind expectations. Ford has also paused electrification efforts at its Almussafes plant due to softer European EV demand, though it remains committed to its investment agenda and open to support from the second phase of Electric and Connected Vehicle initiatives.
The suspension of the Turkish project leaves open the possibility for PowerCo, Volkswagen’s battery subsidiary, to supply cells to Ford for the upcoming electric vehicles planned for Almussafes. Volkswagen aims for PowerCo to become a global battery supplier. Reuters reported that an agreement existed between Volkswagen and Ford to deliver cells for about 1.2 million EVs built on the MEB platform in Cologne.
Volkswagen had originally planned Sagunto to produce 40 GWh per year, but the project has expanded to as much as 60 GWh as the investment grew from 3.0 billion euros to 4.5 billion euros. This increase would enable additional deliveries to third party customers as the program advances.
In February, Ford, LG, and Koç announced a non-binding memorandum of understanding to form a joint venture aimed at creating and operating one of Europe’s largest automotive battery plants. The initial gigafactory concept anticipated an output of 25 GWh annually, with a later target of 45 GWh. The Turkish site was planned near Ankara, with operations expected to begin in 2026.
LG remains among the world’s leading EV battery producers with an annual capacity around 200 GWh and currently supplies Ford from a plant in Poland. The Koç alliance has been a long-standing collaboration spanning six decades, reflecting a deep industrial partnership between a Turkish conglomerate and the global auto group.
The slower growth in EV sales has tempered broad electrification efforts. Volkswagen had outlined plans for six gigafactories at 40 GWh each to secure battery supply, but has refocused on its German sites in Salzgitter and Sagunto for the moment. LG, a supplier to Ford since 2011, postponed plans to double the production capacity of its Poland facility.
Koç described the Turkish venture as financially imprudent given the current pace of EV adoption, arguing that a battery-cell investment would not be timely. The initial plan envisioned breaking ground by the end of 2023 with production slated to begin in 2026. Batteries from the Turkish site were intended for Ford commercial vehicles, including the electric Transit van.
Even with the joint venture on pause, Ford and Koç reaffirmed their commitment to boosting EV production and signaled openness to revisiting battery-cell investments in the future, according to Koç.
Interest Rates
LG, in addition to supplying Ford, also provides batteries to other major automakers such as General Motors and Tesla. In October, LG warned that revenue growth in 2024 could slow due to global economic uncertainties weighing on EV demand. Industry analysts expect that EV sales growth may slow as higher interest rates complicate financing for many buyers.
TWO YEARS TO START PRODUCTION AT PARC SAGUNT
PowerCo has begun pre-construction on the Sagunto battery plant. Volkswagen envisions large-scale production in 2026. The Valencia facility is planned to manufacture cells for up to 800,000 vehicles annually for the German brand. The Gigafactory is also designed to supply Ford’s Seat and VW plants in Martorell and Landaben. In the next phase, PowerCo intends to market cells to external customers as well.