LG to invest in US battery production

28 March 2023

LG Energy Solution is to invest approximately KRW 7.2 trillion (USD 5.5 billion) in the construction of a battery manufacturing complex in Queen Creek, Arizona, USA. The complex will consist of two manufacturing facilities – one for cylindrical batteries for electric vehicles and the other for lithium iron phosphate (LFP) batteries for energy storage systems.

It marks the largest single investment ever for a stand-alone battery manufacturing facility in North America. It is also more than four times the amount the company initially announced last year (KRW 1.7 trillion) to manufacture cylindrical EV batteries in the same location. The cylindrical battery manufacturing facility is expected to start mass production in 2025, mainly to supply EV makers in North America.

As well as the KRW 7.2 trillion, the company plans to invest KRW 4.2 trillion (USD 3.2 billion) in building a cylindrical battery manufacturing facility with a capacity of 27 GWh, and KRW 3 trillion (USD 2.3 billion) in an LFP battery facility with the capacity of 16 GWh. Both facilities, totalling 43GWh, are planned to break ground this year. 

With the new battery manufacturing complex, LGES will boost its production capacity in major product segments, develop more cohesive partnerships with its customers in both EV and ESS sectors, and cut back on the logistics costs by bringing its manufacturing facilities in closer proximity to its customers.

It is the first-ever US cylindrical battery manufacturing facility solely invested by a Korean battery manufacturer. The company's decision to increase investment in cylindrical EV battery production in North America comes from rising demand from EV makers for locally manufactured high-quality, high-performance batteries in an effort to satisfy the Inflation Reduction Act (IRA)'s EV tax credits.

The new manufacturing facility for LFP batteries for ESS, which is the first ESS-exclusive battery production facility in the world, aims to start production in 2026. Situating the new ESS battery facility in North America, the biggest ESS market globally, LGES aims to respond to the fast-growing needs for locally manufactured batteries on the back of the IRA, and further expedite the clean energy transition in North America following from strong government policies supporting the adoption of ESS.

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