Plant 3 Invests $2.6 Billion... "50GWh Mass Production by Early 2025"
Including US Plants 1 & 2, Total $7.2 Billion
Aggressive US Investment Ahead of KOSPI Listing Tomorrow
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 plant. (Photo by LG Energy Solution)
[Asia Economy Reporter Moon Chaeseok] LG Energy Solution, which is preparing to be listed on the KOSPI market, has decided to build a third battery plant in the United States together with General Motors (GM), the No. 1 automobile company in the U.S.
On the 25th (local time), the two companies held an investment announcement event in Lansing, Michigan, USA, and revealed plans to establish the third plant of the electric vehicle battery joint venture ‘Ultium Cells.’ The investment amount is $2.6 billion (approximately 3.11 trillion KRW), with construction starting this year and completion scheduled for the second half of 2024. Phase 1 mass production is planned to begin in early 2025, with production capacity expected to expand to 50 GWh annually. According to LG Energy Solution, this amount can be installed in about 700,000 high-performance pure electric vehicles capable of driving over 500 km on a single charge.
Kwon Young-soo, Vice Chairman and CEO of LG Energy Solution, said, “The Ultium Cells third joint plant, located in the heart of the U.S. automotive industry, will serve as a gateway to producing millions of electric vehicles in the future,” adding, “Together with GM, with whom we have built a long-term cooperative relationship, we will contribute to the transition to the electric vehicle era in the U.S.” Mary Barra, Chairwoman of GM, said, “This new plant 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 plant, we will invest more than $7 billion (approximately 8.38 trillion KRW) in electric vehicle production plants in Michigan.”
Ultium Cells is currently building Plant 1 in Lordstown, Ohio (with an investment of $2.3 billion and a capacity of over 35 GWh) and Plant 2 in Spring Hill, Tennessee (with an investment of $2.3 billion and a capacity of over 35 GWh). Plant 1 will start mass production this year, and Plant 2 will begin next year. Including the third plant, the total investment is expected to reach $7.2 billion (approximately 8.61 trillion KRW), securing an annual production capacity of over 120 GWh.
The reason LG Energy Solution and GM’s joint venture is aggressively building new plants in the U.S. is due to the expected explosive growth of the U.S. electric vehicle market. According to global market research firm IHS, the North American electric vehicle (EV + PHEV) battery market is expected to grow from 46 GWh last year to 143 GWh in 2023 and 286 GWh in 2025, with an average annual growth rate of 58%.
GM announced an investment plan worth $7 billion (approximately 8.38 trillion KRW), including the construction of the new Ultium Cells third plant and converting existing plants in Michigan into electric vehicle production lines, 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.
Explanation material of 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-Indonesia.' (Source: LG Energy Solution)
LG Energy Solution’s speed in targeting the North American market is also expected to accelerate. Previously, LG Energy Solution agreed to establish a joint venture with Stellantis, one of the three major North American automakers, for an annual 40 GWh electric vehicle battery plant. The site is currently under review, with construction planned to start in the second quarter and production targeted for the first quarter of 2024. LG Energy Solution also announced plans for additional investments in North America, aiming to secure more than 40 GWh capacity through standalone plants alone. Combining joint ventures with North American customers and standalone investments, LG Energy Solution’s production capacity in North America is expected to reach 200 GWh. A representative from LG Energy Solution said, “Given the very high growth rate of the North American electric vehicle market and the investment agreement with GM, which has the potential to become No. 1 in electric vehicles in the future, the establishment of the third joint venture plant is very meaningful.”
Meanwhile, LG Energy Solution is set to be listed on the KOSPI market on the 27th. In the institutional demand forecast, the public offering price per share was set at the top of the desired band at 300,000 KRW. The total public offering amount reaches 12.75 trillion KRW.
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