LG Energy Solution to Invest $5.5 Billion in New Battery Plants in the US
The facility will manufacture batteries for EVs and energy storage systems
Battery manufacturer LG Energy Solution plans to invest roughly KRW 7.2 trillion (~$5.5 billion) to build a battery manufacturing complex in Arizona, United States. The current investment is more than four times the amount LG had initially announced last year to manufacture cylindrical EV batteries in the same location.
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 to satisfy the Inflation Reduction Act’s EV tax credits.
The complex will comprise two manufacturing facilities, one for cylindrical batteries specifically designed for electric vehicles and the other for lithium iron phosphate (LFP) pouch-type batteries suitable for energy storage systems (ESS).
The company plans to invest KRW4.2 trillion (~$3.2 billion) in building a cylindrical battery manufacturing facility with a capacity of 27 GWh and KRW3 trillion (~$2.3 billion) in LFP pouch-type battery facility with a capacity of 16 GWh. Both facilities, totaling 43 GWh, plan to break ground this year.
“Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed,” said Youngsoo Kwon, CEO of LG Energy Solution.
The cylindrical battery manufacturing facility is set to commence mass production of 2170 cells by 2025, primarily targeting electric vehicle manufacturers in North America. LG claims this facility is the U.S.’s first cylindrical battery manufacturing plant, solely funded by a Korean battery manufacturer.
LG aims to commence production of LFP pouch-type batteries for ESS in 2026. This state-of-the-art facility will leverage LG Energy Solution Vertech’s fully integrated energy storage solutions, enabling the company to broaden its presence across the entire ESS value chain.
LG Energy Solution and Honda announced they would establish a joint venture to produce lithium-ion batteries in the U.S. to power Honda and Acura EV models for the North American market. LGES and Honda will invest $4.4 billion in the plant. The plant aims to have an annual production capacity of approximately 40 GWh.
Total corporate funding (including venture capital funding, public market, and debt financing) for the energy storage, smart grid, and energy efficiency sectors in 2022 was up 63% with $31.7 billion compared to $19.5 billion in 2021, according to Annual and Q4 2022 Funding and M&A Report for Storage, Grid & Efficiency.