LG Energy Solutions plans to produce 145GWh of batteries that can make around 2.4 million electric vehicles per year in the United States by 2025. Employees of LG Energy Solutions Holland factory in Michigan, USA are looking at pouch-type batteries. LG energy solution provided
LG Energy Solutions will invest more than 5 trillion won in the US and build two additional secondary battery (battery) factories.
It also decided to build a second joint factory with General Motors (GM) of the United States. It is to become the number one global battery company by preoccupying the rapidly growing electric vehicle market in the United States.
LG Energy Solutions announced on the 12th that it has set up two factories in the United States with the aim of completing it in 2025, thereby securing an additional battery production capacity of 70GWh per year.
This is a scale that can supply batteries to 1.2 million GM electric vehicles (in volts). As of the end of last year, it is a super-large investment that amounts to 60% of the company’s production capacity (120GWh per year). Adding the existing factories in Michigan will bring the US production capacity to 75GWh per year.
The newly built US plant will mainly produce pouch-type batteries that are used not only for electric vehicles but also for energy storage systems (ESS). It was also decided to mass-produce the cylindrical battery used by Tesla for the first time. This is because EV startups in the US are demanding the supply of cylindrical batteries.
LG Energy Solutions also decided to promote the establishment of a second factory through Ultium Sells, which was established in cooperation with GM. UltiumSells has invested in the second plant even before the construction of the first plant, which is being built at 35GWh in Ohio, with the goal of completion by the end of the year. The production capacity of Plant 2 is also expected to reach 30GWh per year, similar to that of Plant 1. When all planned investments are made, they will account for about 25% of the US automotive battery market.
Jong-Hyun Kim, President of LG Energy Solutions, said, “We anticipated that the electric vehicle and ESS markets will grow rapidly due to the US Green New Deal, so we made a preemptive investment.”
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LG Energy Solutions’ plan to invest more than 5 trillion won on the 12th is the most aggressive announcement of investments in rechargeable batteries (batteries) in the US by domestic and foreign companies so far. As the US electric vehicle and energy storage (ESS) market is expected to grow rapidly, the goal is to securely dominate the market through large-scale investments. There are also paving stones to keep competitors in check, such as China’s CATL and SK Innovation.
Largest battery production in the U.S.
LG Energy Solutions established a battery research center in the United States in 2000 and has been in the local battery business for over 20 years. However, it did not have a large-scale production system. As of the end of last year, the production capacity of LG Energy Solutions is 120GWh per year. Of these, only about 4% of the 5GWh plant is running in Holland, Michigan, USA. However, with this investment, LG will have a production capacity of 70GWh per year at once. This is twice the battery production capacity of Tesla, which operates the largest battery plant in the United States, and Panasonic of Japan (35GWh per year).
There are also factories that are being built with GM. LG is building a battery plant with an annual capacity of 35GWh in Ohio at the end of this year through UltiumSells, a joint venture established with GM. Prior to completion at the end of the year, Ultium Cells decided to establish an additional second factory in the first half of this year. The production capacity is said to be similar to that of the Ohio plant. By adding the two Ultium Cells plants (70GWh per year) and an independent plant (75GWh per year), the annual production capacity will increase to 145GWh in the US alone. This is a scale that can supply batteries for about 2.4 million electric vehicles.
US battery market explosive growth
The reason LG Energy Solutions is making such a large investment is because the demand for batteries in the US is increasing rapidly. Until now, the global electric vehicle market has grown mainly in Europe and China. Europe is pushing for early withdrawal of internal combustion engine cars through the world’s strongest environmental regulations, and China is giving large subsidies to electric car makers to strategically grow the electric car market in their country.
In the US, although Tesla led the innovation of electric vehicles, the market share in the world was only 14.9% (as of October last year). It is half of that of Europe (33.6%) and China (31.7%). However, the growth potential is much greater in the United States. U.S. President Joe Biden, who took office in January this year, ignited the electric vehicle market with a pledge of eco-friendly policies such as rejoining the Paris Climate Agreement. US automakers such as GM Ford are also rapidly transforming into electric car companies. Jong-Hyun Kim, President of LG Energy Solutions, said, “With the US Green New Deal policy, not only the electric vehicle but also the ESS market will grow rapidly.” “We decided that we should establish a battery supply chain system that is conducted in the US from R&D to production.”
Purpose of checking competitors
LG Energy Solutions’ large-scale investment is also aimed at keeping competitors in check. Last month, the U.S. International Trade Commission (ITC) banned the import of battery-related products from the U.S. for the next 10 years to SK Innovation, which is having a battery technology dispute with LG. SK Innovation, which decided to build a large-scale battery plant in Georgia and supply batteries to Ford and Volkswagen, has secured a grace period of two to four years, but in the worst case, it has to withdraw its business in the US.
As Chinese battery makers such as CATL are in a difficult situation to build factories in the US due to the US government’s checks, LG Energy Solution has become the only alternative to US automakers. Japan’s Panasonic is currently unable to handle Tesla supplies. The foundation stone for this investment announcement is that automakers that produce or plan to produce electric vehicles in the United States will be forced to look at LG through a preemptive investment.
LG Energy Solutions decided to disclose the investment plan and decide on a candidate site for the factory. There is also Noim-soo here. This is to induce good conditions such as tax reduction and free land provision. LG said that only two new factories will need more than 4,000 employees. In addition, the number of manpower required for the construction of the plant is expected to be about 6,000. Over 10,000 new jobs are created. Industry sees that fierce competition will unfold in the US to attract factories. SK Innovation also received benefits such as tax reduction and free site provision when building a plant in Georgia in the past.
Reporter Ahn Jae-kwang [email protected]