Energy Co Pref ADR (CIG) Plunge 3.40% to Year Low as Ford Ends $9.6B Battery Deal

The share price of Energy Co Pref ADR (CIG) fell to its lowest level since the beginning of the year on Dec. 18, with an intraday decline of 3.40%.

The selloff follows the termination of a $9.6 billion battery supply deal between LG Energy Solution (Energy Co’s parent) and Ford Motor Co., announced on Dec. 17, 2024. Ford cited shifting demand forecasts and strategic portfolio adjustments as reasons for canceling the contract, which accounted for a significant portion of Energy Co’s projected revenue. The loss of the deal has raised concerns about the company’s financial stability and its ability to maintain market share in a competitive EV battery sector. Analysts noted the termination could force Energy Co to revise earnings forecasts and operational budgets, while also testing its capacity to secure alternative contracts.

Broader challenges in the EV battery industry amplify the stock’s vulnerability. Sector-wide issues include volatile demand, regulatory uncertainties, and overcapacity risks, all of which pressure suppliers to navigate rapid technological changes and cost pressures. Energy Co’s reliance on a single large client highlights the fragility of its business model, as competitors like Panasonic and CATL intensify competition. Investors will likely scrutinize the company’s strategic responses, including potential diversification efforts and cost-cutting measures, to gauge its resilience in an evolving market. The stock’s performance will remain closely tied to its ability to adapt to these dynamics and retain credibility with stakeholders.

The stock’s continued decline also reflects broader investor sentiment toward EV-related sectors, which have seen increased skepticism in 2024 due to underperforming financial results and regulatory headwinds. Energy Co’s shares are now trading below their 52-week average, raising concerns about short-term liquidity and capital-raising options. Meanwhile, the company’s management has yet to provide a comprehensive strategy for mitigating the fallout from the lost Ford contract. Without clear visibility on revenue replacement or cost reduction, the stock may continue to face downward pressure until new partnerships or market conditions emerge to support its valuation.