Potential pressure on Ford’s CATL licensing deal could support battery cells, but cathode competition remains a concern

Overview

JPMorgan examines potential US policy pressure on Ford’s use of CATL-licensed battery technology and its implications for Korean battery makers. The report sees a possible benefit for battery cells through reduced competing supply additions, but maintains a bearish view on LFP cathodes because competition and pricing pressure are intensifying.

Core views

Reuters reported that the Trump administration raised national-security concerns over Ford’s partnerships with Chinese companies and its use of CATL-licensed battery technology at a Michigan plant. The US Transportation Secretary urged Ford to cut ties with CATL, Geely and BYD. Ford rejected the criticism, stating that it owns the facility, controls operations and is investing in domestic battery production. JPMorgan therefore treats the immediate outcome as uncertain rather than assuming that the project will be halted. The report argues that delays, de-risking or reductions in Ford-linked US battery supply additions could be incrementally supportive for US-based battery cell makers. Its reasoning is that US energy-storage-system demand is expected to rise structurally while non-Chinese supply demand grows. JPMorgan projects US ESS battery demand at 128GWh in 2026E and 303GWh in 2030E, with non-Chinese demand rising from 64GWh to 295GWh over the same period. This prospective demand backdrop supports the institution’s continued preference for battery cell producers, although it remains conservative pending greater clarity on Ford’s response and the ownership structure of the Michigan facility. For LFP cathodes, JPMorgan remains bearish on bargaining power despite an expanding addressable market as Korean battery makers raise LFP ESS production. Korean capacity additions from L&F, Fino and POSCO Future M are expected to intensify domestic competition. At the same time, Chinese cathode suppliers with ASEAN manufacturing footprints may exploit PFE-related gray areas and undercut Korean suppliers by an estimated roughly 20%. The tabled supply-demand data show Chinese LFP cathode capacity in ASEAN rising from 30kt in 2026E to 250kt in 2027E and above 250kt in 2028E, compared with PFE-compliant capacity above 135kt in 2028E. JPMorgan consequently prefers battery makers SK Innovation, Samsung SDI and LG Energy Solution over cathode suppliers L&F, POSCO Future M and Ecopro BM. It cites stronger bargaining power, better execution visibility, and improvement in non-battery businesses or restructuring progress for the preferred battery names. Within cathodes, it relatively prefers LG Chem because it expects improving shipments in the second half, supported by an Ultium restart and re-entry into Tesla’s supply chain.

Analysis framework

JPMorgan starts with the reported policy challenge to Ford’s CATL-linked arrangement, then assesses how a potential reduction in US battery supply additions would interact with projected ESS demand. It separately compares LFP cathode demand with Korean and ASEAN-based Chinese capacity, using supply-demand estimates and relative pricing to evaluate competitive bargaining power.

Methodology notes

• Industry AnalysisSupply-demand framework

  US battery and LFP cathode supply-demand analysis

  The report compares projected ESS demand with cell and cathode capacity to assess whether policy-driven changes in supply additions could affect industry conditions.

• Industry AnalysisUpstream-Midstream-Downstream Transmission

  Policy pressure on Ford’s battery sourcing and its effects on cell and cathode suppliers

  JPMorgan traces a potential disruption at Ford’s licensed battery project through the battery-cell and cathode supply chain.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• SK Innovation (096770.KS)

  Preferred battery maker

  Strengths

  Stronger bargaining power, execution visibility, and non-battery business or restructuring improvement.

  Comparison

  Preferred over cathode suppliers.

  Risks

  Near-term policy implications for Ford-linked supply remain uncertain.

• Samsung SDI (006400.KS)

  Preferred battery maker

  Strengths

  Stronger bargaining power, execution visibility, and non-battery business or restructuring improvement.

  Comparison

  Preferred over cathode suppliers.

  Risks

  Near-term policy implications for Ford-linked supply remain uncertain.

• LG Energy Solution (373220.KS)

  Preferred battery maker

  Strengths

  Stronger bargaining power, execution visibility, and non-battery business or restructuring improvement.

  Comparison

  Preferred over cathode suppliers.

  Risks

  Near-term policy implications for Ford-linked supply remain uncertain.

• L&F (066970.KQ)

  Covered cathode supplier

  Strengths

  Participation in the growing LFP cathode addressable market.

  Weaknesses

  Domestic LFP capacity additions intensify competition and pressure bargaining power.

  Comparison

  Less preferred than battery makers.

  Risks

  Lower-priced Chinese suppliers with ASEAN footprints may undercut Korean pricing.

• POSCO Future M (003670.KS)

  Covered cathode supplier

  Strengths

  Participation in the growing LFP cathode addressable market.

  Weaknesses

  Domestic LFP capacity additions intensify competition and pressure bargaining power.

  Comparison

  Less preferred than battery makers.

  Risks

  Lower-priced Chinese suppliers with ASEAN footprints may undercut Korean pricing.

• Ecopro BM (247540.KQ)

  Covered cathode supplier

  Weaknesses

  JPMorgan remains bearish on cathode bargaining power.

  Comparison

  Less preferred than battery makers.

  Risks

  Korean capacity growth and Chinese pricing pressure.

• LG Chem

  Relatively preferred cathode supplier

  Strengths

  Expected shipment improvement in the second half from an Ultium restart and Tesla supply-chain re-entry.

  Weaknesses

  Sector-wide cathode competition and pricing pressure remain.

  Comparison

  Relatively preferred within cathodes.

  Risks

  Chinese suppliers may continue to undercut Korean pricing.

Key data

• US ESS battery demand128GWh in 2026E; 303GWh in 2030EJPMorgan’s projected structural increase in mostly LFP battery demand.
• US ESS battery demand from non-Chinese suppliers64GWh in 2026E; 295GWh in 2030EProjected increase supporting demand for non-Chinese battery supply.
• Chinese LFP cathode supplier price discount~20%Estimated discount versus Korean cathode suppliers.
• Chinese LFP cathode capacity in ASEAN30kt in 2026E; 250kt in 2027E; >250kt in 2028ECapacity expansion that JPMorgan views as a continuing pricing constraint.
• US non-Chinese LFP cathode demand127kt in 2026E; 274kt in 2027E; 270kt in 2028EDerived using 2kg of LFP cathode content per 1kWh of LFP battery.

Impact & implications

The report argues that policy-related constraints on Ford’s CATL-linked project could improve the relative outlook for US-based battery cell makers if competing supply additions are delayed or reduced. It does not extend that benefit to cathode suppliers, where increased Korean capacity and Chinese pricing competition are expected to restrain bargaining power.

Risks

• Ford’s ownership and operational control of the Michigan facility make the near-term impact of policy pressure uncertain.
• Korean LFP cathode capacity additions could intensify domestic competition.
• Chinese suppliers with ASEAN footprints may continue to undercut Korean cathode prices.

What to watch

• Any US policy action or Ford response affecting the CATL-licensed Michigan battery project.
• The pace of US ESS demand growth and non-Chinese battery supply additions.
• Korean LFP cathode capacity additions and Chinese ASEAN-based cathode supply growth.
• LG Chem shipment trends associated with the Ultium restart and Tesla supply-chain re-entry.