Ford hits pause on a major lithium supply deal
Ford is scaling back one of its key electric vehicle supply deals as the company rethinks its EV strategy amid slowing demand and tighter margins. The automaker will buy less lithium and delay taking shipments from Liontown Resources, the Australian miner developing the Kathleen Valley project, according to a recent exchange filing.
Under the revised agreement, Ford won’t take delivery of any lithium from the mine in 2027 or 2028. The total volume it plans to buy has been cut in half to about 256,250 tons, and Liontown has been given an extra year to repay its $300 million loan from Ford. The move reflects how quickly the industry’s outlook has changed. Just two years ago, manufacturers were racing to secure lithium supplies as battery demand soared. Now, with prices slumping and EV sales slowing, many are reassessing their long-term commitments.
EV market faces turbulence
Ford’s decision comes amid growing signs that the U.S. EV market is cooling off. The company recently said it could lose up to $5.5 billion on its EV business this year, after second-quarter electric vehicle sales plunged 31%. Part of that drop came from aging models and a temporary sales halt for the Mustang Mach-E due to a safety recall.
CEO Jim Farley has also struck a more cautious tone in recent months, predicting that the share of zero-emission vehicles in the U.S. — roughly 10% today — could fall by half. That’s a sharp reversal from the optimism of 2021 and 2022, when EV makers were expanding aggressively and President Biden’s administration was backing strong emissions rules and generous purchase incentives.
The shift in tone follows new policy directions under President Donald Trump, who has worked to roll back emissions standards and reduce federal EV incentives. Without those subsidies, automakers face higher consumer prices and thinner margins, especially as battery materials remain expensive to produce and scale.
Liontown seeks flexibility amid changing tides
For Liontown, the changes may prove beneficial in the long run. The miner said the revised deal gives it the flexibility to sell additional tonnage into the spot market, where prices have recently stabilized after steep declines. It also opens the door to new partnerships, including with Chinese refiners such as Chengwin Lithium Group, which has already taken some of the volume originally allocated to Ford.
“The changes to the offtake agreement afford Liontown the opportunity to place further volumes in the market,” the company said in its statement, adding that this could promote more transparent pricing and diversify its customer base.
Still, the development underscores how fragile the once red-hot lithium market has become. Prices for the mineral have plunged more than 70% from their 2022 highs, as supply surged and EV adoption slowed — particularly in the U.S. and Europe.
Automakers rethink their EV playbook
Ford isn’t the only company pulling back. General Motors recently made a similar move, opting not to claim the now-expired $7,500 EV lease tax credit, though it says it will maintain competitive lease prices. These strategic retreats show how major automakers are trying to balance long-term electrification goals with short-term financial pressures.
Ford
For Ford, that means taking a more measured approach. The company has already delayed several EV projects, shifted resources toward hybrid vehicles, and slowed construction at its battery plants. Executives have said they’re focused on improving profitability rather than chasing volume. It’s a reality check for an industry that once saw electrification as an inevitable, linear march forward. Instead, automakers are finding that demand — and government support — can fluctuate as political winds and consumer preferences shift.
Final thoughts
Ford’s decision to scale back its lithium deal with Liontown Resources is more than a supply chain adjustment — it’s a signal that the EV boom is entering a new, more cautious phase. After years of overcommitment and hype, manufacturers are now weighing cost, policy risk, and real-world demand. For Ford, the move could buy time to regroup and retool its strategy. For Liontown, it’s a chance to diversify its customer base in a volatile market.
Either way, the electric vehicle transition is proving less of a straight road and more of a winding detour — one that’s testing just how committed automakers truly are to a battery-powered future.
