The world’s second-largest electric vehicle battery maker LG Energy Solution Ltd. is spending $1.7 billion to expand its battery production capacity in Holland, a city in the US state of Michigan, by fivefold.
The South Korea-based electric vehicle battery manufacturer recently obtained approval from the Holland City Council on its proposal to increase its annual battery production capacity from 5 gigawatt hours (GWh) to 25 GWh by 2025.
With the $1.7 billion investment, LG Energy Solution said it plans to create more than 1,000 well-paying jobs in Holland.
In return, the Holland City Council will exempt LG from most local and state taxes. The zone, where LG’s facilities are located, will last 20 years, with taxes phasing in 25% each year in the final three years, according to officials.
LG Energy Solution Michigan Inc., which began operations in 2012, has been supplying batteries to major US automakers, including General Motors Co., Ford Motor Co. and Chrysler.
Once its Michigan facilities are expanded, the company also plans to supply batteries to European carmakers as well as energy storage system, or ESS, companies.
Separately, LG Energy is running a battery joint venture, Ultium Cells LCC, with its partner GM in the US.
LG Energy and GM announce a $2.6 billion project to build their third JV FOURTH JV FACTORY WITH GM
Ultium Cells will establish its third factory in Lansing with a capacity of up to 50 GWh, enough for 700,000 EVs that can drive 500 kilometers on a full charge.
The JV will break ground later this year and complete the construction in the second half of 2024, with an aim to start mass production in early 2025.
LG and GM are also said to be considering their fourth plant, with an expected annual production capacity of 30 GWh. GM Chairwoman and Chief Executive Mary Barra said earlier this month she will announce details, including the location of the new plant, by the end of the first half.
Currently, Ultium is already building two 35 GWh battery plants, one in Ohio and the other in Tennessee. The Ohio factory is set to commence operations this year and the Tennessee facility is slated to start production in 2023.
LG Energy has been increasing investment to expand its presence in the US as the North American battery market is forecast to grow at 58% a year, on average, to 143 GWh by 2023 and 286 GWh by 2025 from 46 GWh this year, according to market researcher IHS Markit.
In October of last year, the Korean company said it is also launching a JV with the world’s No. 4 carmaker Stellantis N.V. to build a battery manufacturing facility in the US. The JV is looking for a site for a plant with a 40 GWh capacity, aiming to break ground in the second quarter and start production in the first quarter of 2024.
When LG’s own plant in Michigan and its JVs with GM and Stellantis are fully up and running, the Korean company’s total capacity in the US will reach more than 200 GWh, the largest among battery makers in the North American market.
EV battery system developed by Ultium, a JV between LG and GM AIM HIGH
LG Energy also operates facilities in Korea, Poland and China as well as a JV with Hyundai Motor Co. currently under construction in Indonesia, bringing its total global capacity to over 400 GWh.
He said LG Energy had an order backlog worth 260 trillion won ($217 billion) as of the end of 2021, larger than that of CATL, and that he expects revenue growth of more than 25% over the next three years.
According to data released by market tracker SNE Research on Monday, CATL dominated the global battery market with a 32.6% share as of end-2021, followed by LG Energy with a 20.3%
LG also counts Tesla Inc. and Volkswagen as its major global clients.
“When China phases out state subsidies for its EV makers by the end of 2023, LG will be reentering the world’s largest EV market, further narrowing the gap with CATL,” said an industry official.
