LG Chem is in talks with U.S. auto giant General Motors about building a second joint venture electric vehicle battery plant in the United States, in a move that would help the flagship affiliate of South Korean conglomerate LG stay competitive in the hot EV battery market.
LG Energy Solution, LG Chem’s wholly-owned battery division, and GM are “currently discussing plans” to build the second plant, LG Energy Solution said in a statement on Thursday. The plant would operate at a scale close to that of the duo’s anticipated first U.S. factory. The first broke ground in May in Ohio for an expected capacity of 35 gigawatt-hours and a construction cost estimated at $2.3 million. The location of the second plant has not yet been announced.
The discussions with GM come as automakers in the U.S. and beyond have announced plans over the next few months for new EV models, says Sam Abuelsamid, principal research analyst based in Michigan at research firm Guidehouse Insights. “In order to build all those EVs, they’re all going to need batteries,” he says.
Under LG Corp. Chairman and CEO Koo Kwang-mo, who is No. 13 on Forbes’ latest South Korea rich list with an estimated net worth of $1.8 billion, the company has been spending billions on the EV battery market globally. It is now one of the largest makers of EV batteries.
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LG has operated a plant in Michigan since 2012. LG Energy Solution anticipates expanding an existing self-operated U.S. plant, Abuelsamid says. The company statement says LG Energy Solution will open another factory of its own for combined self-operated U.S. capacity of 70 gigawatt-hours. It says its self-operated U.S. expansion will cost $4.5 billion by the end of 2025.
LG sells batteries to Audi, Ford, GM, Porsche and Volkswagen, among other established automotive brands, Abuelsamid says.
U.S.-based automakers will crank out 1.2 million EVs per year, Abuelsamid forecasts. Pressure to produce them would mount ahead of 2035, when the state of California will ban sales of new gas-powered vehicles.
GM has said it will sell 1 million EVs per year by mid-decade in the U.S. and China. Globally, the release of new models, pent-up consumer demand and supportive government policies should raise EV sales this year onward after a 2020 drop caused by Covid-19 containment measures, analysis firm ResearchAndMarkets.com says.
LG and GM have worked together since the American automaker’s first lithium-ion battery vehicle the Chevy Volt. LG can “cement its position” in the U.S. going forward through factory expansion and forming more joint ventures like the GM deals, says Chris Robinson, a senior analyst with Lux Research. Joint ventures share costs of building new plants and help secure commitments from customers, he says.
The Korean firm and its peers will feel growing pressure to make cells near automotive factories to avoid the dangers and costs of transporting them, industry analysts believe. LG might be eyeing future U.S. factory sites near major automotive plants, Abuelsamid says.
“This expansion [by LG] speaks to the rapid increase in electric vehicle sales, and the supply chain concerns automakers have,” Robinson says. “This additional capacity ensures GM will have the cells it needs to deliver on its electric vehicle ambitions.”
As a news reporter I have covered some of everything since 1988, from my alma mater U.C. Berkeley to the Great Hall of the People in Beijing where I followed Communist