LG Energy Solution to Supply Batteries to Toyota After Acquiring Third Plant in Michigan, USA

Agreement Reached on Acquisition of GM Joint Venture Stake
Change in Production Site for Contracted Battery Supply

LG Energy Solution is reportedly considering supplying batteries produced at the joint venture with GM in Michigan, USA, to Toyota in Japan if it acquires the stake in the joint venture.

According to Bloomberg and related industry sources on the 18th (local time), LG Energy Solution is weighing the option of supplying electric vehicle and hybrid vehicle batteries to Toyota Motor after completing the acquisition of the third plant owned by Ultium Cells, a joint venture between its subsidiary LG Energy Solution Michigan and General Motors (GM), located in Lansing, Michigan.

LG Energy Solution Michigan Holland Plant, USA. Photo by Yonhap News

Originally, LG Energy Solution planned to sign a long-term supply contract with Toyota in October 2023 for 20 gigawatt-hours (GWh) of electric vehicle batteries annually and invest a total of 4 trillion won in another plant in Michigan to establish dedicated battery cell and module production lines. However, this investment did not materialize, and LG Energy Solution is reportedly considering shifting Toyota's battery orders to the third plant as an alternative.

A company official stated, "Battery supply to Toyota could differ from the original plan if we acquire the third plant," adding, "We expect to complete the acquisition contract for Lansing within this year."

Initially, the company planned to supply batteries produced at the third plant to GM. However, as GM scaled down its electric vehicle production plans, it decided to sell its stake invested in Ultium Cells' third plant to LG Energy Solution. Consequently, there has been keen interest in where the order volume to operate the Ultium Cells third plant will be secured.

Earlier, LG Energy Solution disclosed that it signed a debt guarantee worth 5.6 trillion won for its subsidiary as part of the third plant acquisition process. Going forward, LG Energy Solution plans to conduct due diligence and asset evaluation on the third plant before an agreement among Michigan, Ultium Cells, and GM, and will finalize the detailed contract terms and purchase price before signing the main contract.