LG Chem Ltd., South Korea’s largest chemicals maker, said on Tuesday it is building a $3.2 billion cathode plant in Tennessee, its first factory for the battery component in the US, to meet growing demand and respond to the rapidly changing business conditions in North America.
LG Chem, parent of the world’s second-largest battery maker LG Energy Solution Ltd., has signed a memorandum of understanding with the US state government on the cathode manufacturing facility in Clarksville, Tennessee – the largest of its kind in the US.
The plant will be capable of producing 120,000 tons of cathodes a year by 2027, enough to power 1.2 million pure electric vehicles with a range of 500 km per charge, the company said.
Construction of the plant will begin in the first quarter of next year on land stretching 1.7 million square meters, with mass production scheduled for the second half of 2025.
LG Chem CEO Shin Hak-cheol (left) and Tennessee Gov. Bill Lee shake hands after signing a $3.2 billion cathode plant deal Cathode, a key ingredient for rechargeable batteries, is made up of nickel, lithium and other materials, and comprises around 40% of the cost of electric vehicle batteries.
Securing a stable supply of cathode materials has increasingly become a key factor for both automakers and battery manufacturers amid rising mineral costs.
SMART FACTORY WITH 100% RENEWABLE ENERGY
“The new cathode manufacturing facility in Tennessee will bring us one step closer to becoming the world’s best battery materials manufacturer,” LG Chem Chief Executive Shin Hak-cheol said in a statement.
The company said the new factory will operate on 100% renewable energy and smart factory technology to automate the entire production process.
LG Chem's Tennessee cathode manufacturing plant LG said the new plant will feature advanced technology such as producing more than 10,000 tons of cathode material per line, the industry’s highest.
Tennessee Gov. Bill Lee, Department of Economic and Community Development Commissioner Stuart McWhorter and LG Chem CEO Shin attended the signing ceremony.
“LG Chem’s decision to invest $3.2 billion in Clarksville is a testament to Tennessee’s unmatched business climate, skilled workforce and position as a leader in the automotive industry,” said the Tennessee governor.
The new factory will also create more than 850 new jobs across Montgomery County, he said.
CLOSER TO CUSTOMERS
LG Chem said Tennessee is the best choice for the company due to its proximity to key customers, ease of transporting raw materials and active cooperation of the state and local governments.
Tennessee is home to Ultium Cells LLC, LG’s battery joint venture with General Motors Co.
Cathode, a key battery ingredient, accounts for around 40% of the cost of EV batteries LG Chem said the Tennessee facility will help it achieve its goal of increasing its global battery materials business fourfold to 20 trillion won ($14.8 billion) by 2027 from an estimated 5 trillion won in 2022.
The IRA, signed into law by US President Joe Biden in August, requires a certain percentage of critical minerals used in EV batteries to come from the US or its free trade partners.
From next year, EV makers must use batteries with materials sourced primarily in North America for their cars to be eligible for the tax credit of up to $7,500 per unit.
Qualifying EVs must contain at least 40% of their battery minerals and 50% of their battery components from those countries. The proportion will rise to 80% for minerals by 2027 and 100% for parts by 2029.
Write to Jae-Fu Kim at hu@hankyung.com In-Soo Nam edited this article.
