LG Energy Solution to Invest Over $5.5 Billion to Build Battery Plant in US

An employee walks past the logo of LG Energy Solution at its office building in Seoul, South Korea, on Nov. 23, 2021. Kim Hong-Ji/Reuters

LG Energy Solution (LGES) said on March 24 that it would proceed with its plan to build a battery manufacturing complex in Arizona, investing 7.2 trillion won ($5.52 billion) to meet the increasing demand for batteries.

LGES, one of the world’s largest battery makers, previously said it reviewed the project due to the “unprecedented economic conditions and investment circumstances in the United States.”

In a statement on Friday, the Seoul-based company said it has decided to move forward with the battery project in Arizona in response to the market demand for batteries.

“With the implementation of the U.S. Inflation Reduction Act (IRA), customer requests for stable supply of high-quality and high-performance batteries have increased significantly in North America,” it stated.

Of the total investment, LGES will use 4.2 trillion won ($3.2 billion) to build a cylindrical battery plant and the remaining 3 trillion won ($2.3 billion) to construct a lithium iron phosphate (LFP) pouch-type battery facility with a capacity of 16 gigawatt-hours.

The company said that its new cylindrical battery plant will have an annual production capacity of 27 gigawatt-hours, which is enough to produce 350,000 high-performance electric vehicles (EVs), and begin mass production by 2025.

The Arizona plant is the second U.S. battery project LGES has announced since the IRA became law in August last year. The company announced a $4.4 billion battery plant in Ohio with Japan’s Honda Motor Co. in October last year.

The Biden administration has been pushing policies designed to bring more investment in battery and EV manufacturing into the United States, causing a major rush by companies worldwide to build production lines in the country as state governments implement stricter regulations and tax credit eligibility to encourage more widespread use of EVs.

California regulators last year announced a bill that would ban the purchase of all new combustion engine vehicles in the state by 2035, making only electric or electric hybrid vehicles available to consumers there.

LGES, known globally for developing and producing lithium-ion batteries used for electronics and vehicles, has also signed joint-venture agreements with General Motors Company (GM), Hyundai Motor Company, and Stellantis N.V.

LGES announced a joint plan with GM in January last year to build its third $2.1 billion battery factory in the United States for the American automaker, with construction expected to start in early 2023.

The company said it’s already building two plants with GM in Ohio and Tennessee to manufacture enough batteries to produce 70 gigawatt-hours of power, which is expected to supply about 1 million EVs by 2024.

Bryan Jung and Reuters contributed to this report.