LG Energy Solution to Build 3rd Plant for US Battery Joint Venture with GM

Completion in 2024... Annual Production Expanded to 50 GWh Starting Early 2025

Kim Dong-myeong, Vice President and Head of the Automotive Battery Division at LG Energy Solution, speaking about the investment agreement for the construction of GM's third joint venture factory. (Photo by LG Energy Solution)

[Sejong=Asia Economy Reporter Moon Chaeseok] LG Energy Solution has decided to build its third electric vehicle battery joint factory with General Motors (GM), the No. 1 automobile company in the United States.

LG Energy Solution announced on the 26th that it will invest a total of $2.6 billion (approximately 3.1148 trillion KRW) to build the third joint factory of Ultium Cells, an electric vehicle battery joint venture company equally owned by LG Energy Solution and GM. To this end, it disclosed yesterday that it had decided on a paid-in capital increase of $2.1 billion (approximately 2.5158 trillion KRW).

Regarding the investment agreement on this day, Kwon Young-soo, Vice Chairman of LG Energy Solution, said, "The third joint factory of Ultium Cells, located in the heart of the U.S. automotive industry, will serve as a gateway to the production of millions of electric vehicles in the future," adding, "We will contribute to the transition to the U.S. electric vehicle era together with GM, with whom we have built a long-standing cooperative relationship." Mary Barra, Chairwoman of GM, said, "This new factory is a very significant step for GM, which aims to become the No. 1 in the North American electric vehicle market by 2025," and added, "Including the new Ultium Cells factory, we will invest more than $7 billion (approximately 8.386 trillion KRW) in electric vehicle production plants in Michigan." Attending the event were Chairwoman Barra, Michigan Governor Gretchen Whitmer, and Kim Dong-myeong, Head of LG Energy Solution's Automotive Battery Division.

The factory is scheduled to be completed in the second half of 2024. The first phase of mass production will begin in early 2025, with plans to expand the factory to an annual production capacity of 50 GWh (gigawatt-hours). This capacity is enough to produce about 700,000 high-performance pure electric vehicles capable of driving more than 500 km on a single charge.

Explanation material on LG Energy Solution's five-point production system, which is strengthening production capacity in the North American market. Production lines have been established in 'Korea, North America, China, Poland, and Indonesia.' (Source: LG Energy Solution)

LG Energy Solution and GM will be able to secure additional large-scale electric vehicle battery production capacity in the United States. Ultium Cells is currently constructing its first factory (35 GWh+α) in Ohio and its second factory (35 GWh+α) in Tennessee. The first factory will start mass production this year, and the second factory will begin production next year. The goal of both companies is to secure an annual production capacity of more than 120 GWh, including the third factory.

The pace of targeting the North American market, which has the fastest growth rate in the global electric vehicle market, is expected to accelerate. Previously, LG Energy Solution decided to establish a joint venture for electric vehicle batteries with Stellantis, one of the three major automakers in North America, with an annual capacity of 40 GWh, in addition to its sole battery production plant in Michigan. The site is currently under review, with construction planned to start in the second quarter of this year and production targeted for the first quarter of 2024. In addition, further investments in North America are planned, aiming to secure more than 40 GWh capacity through sole factories alone. Combining joint ventures with North American customers and sole investments, LG Energy Solution's production capacity in North America is expected to reach 200 GWh. According to global market research firm IHS, the North American electric vehicle (EV+PHEV) battery market is expected to grow from 46 GWh in 2021 to 143 GWh in 2023 and 286 GWh in 2025, with an average annual growth rate of 58%.

With the expansion of the North American market, LG Energy Solution explained that it has established the industry's largest global production system connecting Korea, North America, China, Poland, and Indonesia. It optimizes logistics costs through local production at major bases, responds quickly to local policies and market changes, and provides timely product supply and technical support to automakers.

GM is also continuing investments aiming to achieve the No. 1 market share in the North American electric vehicle market by 2025. GM plans to launch more than 30 electric vehicle models by 2025 and convert all production vehicles to electric by 2035. A representative from LG Energy Solution said, "The electric vehicle batteries produced by Ultium Cells will be installed in GM's new electric vehicles," adding, "Ultium Cells, born from the solid partnership between the two companies, will be a key base leading the transition to the electric vehicle era in the North American market."