South Korean battery maker LG Energy Solution (LGES) has formed a new partnership with China’s Changzhou Liyuan New Energy Technology for the supply of cathode materials necessary for lithium iron phosphate (LFP) battery production, Korea JoongAng Daily reported.
Supply agreement
On Thursday, LG Energy Solution (LGES) reportedly inked a long-term battery supply agreement with Changzhou Liyuan.
As part of the deal, Changzhou Liyuan will supply approximately 160,000 tons of cathode materials in five years to support LGES’ LFP battery production ramp-up.
Notably, the agreed 160,000 tons of cathode materials are expected to sufficiently enable the production of up to one million electric vehicle batteries. These batteries can reportedly deliver a driving range of more than 400 kilometers (249 miles) between charges.
Purpose
LGES primarily aims to accelerate its production of LFP batteries amid the growing demand for electric vehicles. The cathode material supply will also go toward the South Korean company’s energy storage systems (ESS) projects.
LGES is highly optimistic that Changzhou’s cathode materials will significantly aid in achieving these main objectives.
“This partnership with Changzhou Liyuan strengthens our ability to meet the growing demand [for] LFP batteries. The company’s expertise and production capabilities will play a pivotal role in expanding our LFP battery offerings and supporting the transition towards a more sustainable future.”
LGES spokesperson
The supply agreement seems to primarily sustain LGES’ offerings for the Chinese market. The South Korean company is reportedly exploring separate deals for its products in Europe and North America.
About Changzhou Liyuan
Changzhou Liyuan is a Chinese supplier of cathode materials for LFP batteries based in Nanjing, China.
It currently has an annual production output of 310,000 tons in China. In Indonesia, the Changzhou Liyuan has an additional 30,000 tons of production capacity per year. It aims to gradually boost the Indonesian factory to 120,000 tons.
LGES officially officially started producing its LFP batteries for EES in China at the end of 2023. Now, it aims to kick off mass production of battery-grade LFP batteries in the second half of 2025.
The two companies have yet to disclose the financial scope of the order. However, the report noted their plans to explore supply contract expansion “depending on the future market situation.”
