South Korean battery manufacturer LG New Energy has announced plans to invest 7.2 trillion won in a new battery factory in Arizona, USA. The company is expected to make a decision on the construction of the plant soon, possibly before the end of the first half of this year. Once completed, the plant will have an annual production capacity of 43GWh, making it the largest single battery production plant in North America.
Background
LG New Energy is a new company that was spun off from LG Chem in December 2020, specializing in the battery business. Its customers include Tesla, General Motors, and Volkswagen. The company raised more than $10 billion through an IPO in January this year and is preparing to establish joint ventures with General Motors in the United States and with Stellantis in Canada.
Initial Plan
As early as March last year, LG New Energy announced its plan to invest 1.7 trillion won to build a battery factory in Arizona to supply car batteries to companies such as Tesla. The new plant was originally scheduled to start construction in the second quarter of 2022, with the target of being put into operation in 2024. It was planned to have an annual production capacity of 11GWh.
Delay in Construction
However, the construction plans for the plant were put on hold in June 2022. The delay was reportedly due to the shortage of semiconductors, which had caused a slowdown in the automobile industry. The company had to prioritize its production of batteries for electric vehicles, which had strong demand at the time.
Restart of the Program
LG New Energy later announced in January this year that it would advance its plan to build a factory in Arizona as originally planned. The company is negotiating with Tesla and other manufacturers to supply batteries from its Arizona factory.
Future Plan
Last Friday, LG New Energy CEO Kwon Young-soo revealed that the company will make a decision on building a plant in Arizona soon, possibly before the end of the first half of the year. Foreign media reported that the factory will start construction this year and be completed in 2025. Once completed, the plant will have an annual production capacity of 43GWh, which would make it the largest single battery production plant in North America, LG CELLS said.
Impact
The investment in the new battery factory is expected to help LG New Energy increase its market share in the electric vehicle battery market, which is expected to grow rapidly in the coming years. The company's partnership with major automakers such as Tesla, General Motors, and Volkswagen is also expected to benefit from the increased production capacity.
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