May 26, 2022

South Korean LG Energy Solutions, which supplies electric vehicle batteries to Tesla, Lucid Motors, General Motors and Protera, said Thursday it will invest $1.4 billion (1.7 trillion won) to build a cylindrical battery plant in South Korea. Queen Creek, Arizona.

The move is a clear sign that LG Energy is expanding its presence in the United States. The company said in January that it plans to spend $2.1 billion on General Motors to build a third combined electric vehicle battery plant in the US. Last year, Stelantis entered into an agreement with LG to manufacture battery cells and modules in North America.

LG’s investment in Arizona comes at a time when there is growing demand in the North American market for applications that use cylindrical cells and cylindrical batteries, such as power tools that urgently need power or mobile devices such as electric vehicles or e-bikes. This is because, according to an LG spokesperson, these types of batteries are relatively smaller but have a higher energy density.

According to the company, construction on the 11 gigawatt-hour site will begin in the second quarter of 2022, with volume production to begin in 2024.

LG Energy says the plant will be the first barrel-type battery plant in North America to be supplied to electric vehicle manufacturers. Electric vehicle makers such as Tesla, Lucid and Protera could be potential customers, according to a Reuters report. LG says it has work contracts but declined to say which companies it will supply through its Arizona facility.

LG Energy says it is looking for additional manufacturing capacity in the US. In January, LG Energy raised over $10 billion in an IPO.

Japanese company Panasonic, which also supplies Tesla batteries, is looking for sites to build a factory in Oklahoma or Kansas, NHK told NHK in February. Toyota also plans to build a battery manufacturing plant in the US with a goal of starting production in 2025.

The influx of foreign battery companies developing batteries in the US could be the result of President Joe Biden’s infrastructure bill, which allocates billions of dollars to develop the nation’s battery supply chain.

LG did not respond in a timely manner to confirm its eligibility for US funding to build such a supply chain.

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