Joint Venture with GM in the United States
LG Energy Solution will acquire the third Ultium Cells plant, a joint venture with General Motors (GM), for approximately 3 trillion KRW. This move aims to minimize the burden of new expansion investments and enhance the operational efficiency of existing facilities.
On the 1st, LG Energy Solution's wholly-owned subsidiary, LG Energy Solution Michigan, held a board meeting on the 31st of last month and announced that it will acquire all assets related to the Ultium Cells third plant located in Michigan, USA, for $2.084 billion (3.0562 trillion KRW).
LG Energy Solution explained, "The contract amount may decrease, and the actual expenditure will be half of the contract amount since it is in the form of a joint venture. The expenditure is included in the capex (capital expenditure) announced earlier this year, so there will be no additional increase in investment costs."
The Ultium Cells third plant is currently finishing building construction and is in the process of equipment installation.
This decision is part of a ‘Rebalancing’ strategy to overcome the chasm (temporary demand stagnation) in the global electric vehicle market. By optimizing production bases and maximizing the use of existing investment assets, the company plans to flexibly navigate through the temporary crisis by responding to customer demand.
LG Energy Solution announced plans to produce energy storage systems (ESS) using its Michigan Holland plant in the USA and its Wrocław plant in Poland. In the case of the Michigan Holland plant, instead of building a new ESS plant in Arizona, USA, the company will convert an expansion line within the existing plant to ESS production, enabling local production in North America one year earlier than planned. The Wrocław plant in Poland also improved line operation efficiency through ESS conversion.
Earlier, LG Energy Solution was selected as a business partner for a large-scale ESS project promoted by Poland’s state-owned power company PGE on the 24th of last month. On the 27th, it also secured a stable supply channel by signing a strategic partnership with global energy management company Delta Electronics in the USA to supply a total of 4GWh of residential ESS over five years.
An LG Energy Solution official stated, "Starting with production facility rebalancing, we plan to further optimize customers and product portfolios to overcome short-term difficulties and strengthen preparations for the future."
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