LG Energy Solution Ltd. (LGES) said Friday it will push ahead with its plan to build a battery manufacturing facility in the U.S. state of Arizona, reversing its earlier announcement that it was having second thoughts due to rising costs.
LGES said in a filing the decision was finalized at a board meeting, citing “the need to respond to the electric vehicle demand in America.”
The disclosure came hours after LGES CEO Kwon Young-soo said the company will make a final decision soon on the proposed Arizona plant, including the possibility of supplying Tesla Inc. from the proposed manufacturing facility.
“We’re thinking deeply about it and will make a decision soon, possibly before the first half,” Kwon told reporters after a shareholders meeting.
LGES, the world’s second-largest battery maker after China’s CATL, said in March last year it will spend 1.7 trillion won (US$1.31 billion) to build what will be its second standalone factory in Arizona, but withdrew the plan a few months later, citing a spike in costs amid runaway global inflation.
In an earnings call in January this year, the company said the plan will proceed as originally planned. Speculation has arisen that the Arizona factory will be built to supply Tesla for its vehicles in the U.S. market.
LGES supplies its batteries to Tesla in China.
LG Energy Solution Ltd. CEO Kwon Young-soo speaks during a shareholders meeting in Seoul on March 24, 2023, in this photo provided by the company. (PHOTO NOT FOR SALE) (Yonhap)
Kwon said negotiations have been going smoothly with Toyota Motor Corp. over a potential partnership, including the possibility of a joint venture, Kwon added, without elaborating.
Asked about the lithium iron phosphate (LFP) batteries, Kwon said LGES expects to produce them at scale for electric vehicles starting 2025.
South Korean battery makers, mainly focused on the higher end of the EV battery market, are in a race to develop the cheaper LFP cells to meet the growing demand from global automakers seeking to diversify cell types.
LFP batteries have increasingly gained traction due to cheaper costs than high-nickel based cells, but their lower energy density remains a challenge.
LGES, the world’s second-largest battery manufacturer after China’s CATL, presented its LFP battery solution for energy storage systems (ESS) at a Seoul battery show last week.
“We’ll have a part of (the LFP cells) for the ESS come out this year, and those for the (electric) vehicles will come around in 2025,” Kwon said.
Friday’s shareholders meeting was LGES’ first such session following the blockbuster initial public offering in January last year that helped the company raise 10.2 trillion won (US$7.9 billion). LGES was carved out from LG Chem Ltd. in late 2020.
Source: Yonhap News Agency