The Korea Herald


LG Energy Solution to build W7.2tr battery plants in Arizona

Korean battery maker to build world's first battery plant for energy storage systems only

By Kan Hyeong-woo

Published : March 24, 2023 - 18:14

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LG Energy Solution's pouch lithium iron phosphate battery cell for energy storage systems (LG Energy Solution) LG Energy Solution's pouch lithium iron phosphate battery cell for energy storage systems (LG Energy Solution)

LG Energy Solution will invest 7.2 trillion won ($5.6 billion) to build two battery plants in the US to solidify its leadership in the battery value chain in North America, the South Korean battery maker announced Friday.

The battery plants will break ground in Queen Creek, Arizona, this year.

The company is spending 4.2 trillion won on the first plant to produce cylindrical batteries, which will be supplied to US electric vehicle makers. The company said it will be the first Korean battery maker to set up a cylindrical battery plant in North America.

The plant is projected to have an annual production capacity of 27 gigawatt-hours, enough to power 350,000 EVs. The cylindrical batteries are expected to be supplied to Tesla.

The second plant is going to be specifically designed to produce lithium iron phosphate batteries for energy storage systems (ESS), the first of its kind in the world by a global battery maker, LG Energy Solution said. The company has allocated a 3 trillion won investment for the ESS battery site that will have a production capacity of 16 GWh per year.

The Arizona site will have the largest production capacity at 43 GWh in North America, LG Energy Solution said. It aims to begin production at the first and second plants in 2025 and 2026, respectively.

The investment was approved at Friday's meeting of the board of directors, according to LG Energy Solution. The decision came about nine months after the company said in June that it was reconsidering its earlier plan to build a 1.7 trillion won battery plant at the same location due to rising costs amid the worsening global economic environment.

"As the US Inflation Reduction Act took effect, the customers' demand for a stable supply of high-quality and high-performance batteries has increased a lot in the North American region," said LG Energy Solution in a statement.

"Accordingly, we decided to drastically expand the originally planned investment to actively cope with the demand from the customers and market."

The global cylindrical battery market, estimated at 36.8 trillion won last year, is projected to grow to reach 70.2 trillion won in 2026, the firm said. Market tracker SNE Research forecasts that the North American ESS market will grow tenfold to hit 159 GWh in 2030.

With the upcoming plants in Arizona, LG Energy Solution will have seven production sites in North America, including its Michigan plant, a joint plant in Ohio with General Motors, two more plants with GM under construction in Tennessee and Michigan, another plant in Ohio with Honda and a plant in Ontario, Canada, with Stellantis.

"The construction of our own plants in Arizona will serve as an opportunity to surely secure the fast-growing North American EV and ESS markets," said LG Energy Solution CEO Kwon Young-soo.

"We will provide the world's best customer value by having a differentiated global production capacity and further strengthening unrivaled product quality."