LG Energy Solution's Joint Venture Strategy with Automakers to Compete with CATL
Honda Must Establish Parts Factory to Respond to USMAC in the US
[Asia Economy Reporter Hwang Yoon-joo] LG Energy Solution is considering establishing a battery joint venture with the Japanese automaker Honda. As competition intensifies with China’s CATL, the world’s number one battery company, the strategy is to aggressively expand production capacity both domestically and internationally.
According to the battery industry on the 14th, LG Energy Solution is discussing the establishment of a battery joint venture with Honda in the United States. Details such as production scale, investment amount, and share ratio have not yet been decided.
The reason LG Energy Solution is partnering with Honda to establish a joint venture in the U.S. is that the interests of the battery industry, which is engaged in a market share war, and the automotive industry, which must comply with the United States-Mexico-Canada Agreement (USMCA), align. With the USMCA coming into effect, from July 2025, 75% of automotive parts must be produced in the U.S. to qualify for tariff exemptions.
LG Energy Solution’s market share was 25.7% in 2020 (January to November), surpassing CATL’s 19.0% to become the world’s number one, but it dropped to second place in 2021 (January to November). While CATL increased by 10 percentage points to 29.0% in one year, LG Energy Solution fell by 3.5% to 22.2%.
LG Energy Solution is responding with a strategy to increase market share in key markets such as the U.S., Europe, and China by establishing joint ventures with global automakers. This explains why LG Energy Solution has been rapidly setting up joint factories with automakers like GM and Stellantis over the past six months.
This aligns with the confidence expressed by Kwon Young-soo, Vice Chairman of LG Energy Solution, at the IPO briefing on the 10th, when he said, "For China’s CATL to become a global company, it must secure customers in Europe and the U.S., which will not be easy. LG Energy Solution has secured global customers that CATL does not have."
LG Energy Solution plans to secure a production capacity of at least 160GWh in the U.S. by 2025. To this end, 63% (5.6 trillion KRW) of the total investment of 8.845 trillion KRW to be executed by 2025 will be poured into the U.S.
LG Energy Solution stated, "We are discussing the establishment of production plants with various automakers domestically and internationally, but no joint venture with any specific company has been finalized yet."
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