LG Energy Solution (LGES) announced its plans to spend 7.2 trillion won (USD5.56 billion) to establish its second independent battery production factory in the US on March 24, per South Korean news agency Yonhap.
The move aligns with the company’s initial announcement after it decided to reconsider the plan in 2022. The announcement also followed LGES’ statement in January, saying it is in “active discussion” with its US clients, such as Tesla.
Purpose
The South Korean EV battery giant aims to allocate 4.2 trillion to constructing its cylindrical battery production plant in Queen Creek, Arizona.
LGES set an annual production target of 27 gigawatt-hours, sufficient to drive 350,000 EVs, per the press release.
It is worth noting that the company’s first standalone battery production plant is located in Michigan. Now that plans are set, the second plant will be in Arizona.
Investment
The finalized investment plan in the Arizona plant indicates a significant increase from just 1.7 trillion won announced in March 2022. Notably, the initial investment did not cover the LFP factory construction.
However, it canceled the project a few months later that year due to increasing costs amid global inflation. On January 2023, LGES decided to reconsider the plan.
“We have received increasing requests from customers for a stable supply of high-quality, high-performance batteries with the implementation of the IRA.
We decided, accordingly, to actively respond to such market demand by significantly expanding the investment from the previously planned.”
LGES
About the Arizona plant
The Arizona plant will produce the prominent 2170 cylindrical EV battery cells in 2025 and LFP pouch-type batteries for energy storage systems, per LGES in 2026.
See Also:
- LG Energy Solution bets on US expansion to beat Chinese competitor CATL
- LG discussing to supply Tesla with Arizona plant-produced EV batteries
- Honda, LGES break ground for new JV battery plant in Ohio
- Ford forms partnership with LGES and Koç Holding for EV battery plant development in Europe
- LG Energy Solution: EV battery market is booming as orders increase in US
The plant is expected to start construction this year, with plans to open in 2025. Meanwhile, mass production is anticipated by 2026.
“The company’s decision to increase investment in cylindrical EV battery production in North America comes from rising demand from EV makers for locally manufactured high-quality, high-performance batteries in an effort to satisfy the Inflation Reduction Act (IRA) EV tax credits.”
LGES
