LG Energy Solution invests $1.4 billion to build battery factory in Arizona

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LG Energy Solution is investing approximately $1.4 billion (US) to construct factory in Queen Creek, Arizona for the purpose of manufacturing cylindrical batteries.

The construction of this 11GWh capacity site is set to begin in the second quarter of this year, with plans for mass production slated in the second half of 2024. The cylindrical batteries will be supplied to EV manufacturers as well as electric tool companies in North America.

Electric vehicles are driving demand for lithium-ion phosphate batteries, according to London-based, S&P Global-owned IHS, which predicted a battery module price increase of 5% this year will drive up the overall cost of stationary battery projects around 3%. The analyst recorded price rises of 10-20% for lithium-ion batteries in the “later months of 2021,” it predicted price tags will not return to a downward trajectory for another two years and even that development will depend on manufacturers expanding production capacity and seeing off demand from EV makers.

LGES’s investment decision comes on the back of growing demand of cylindrical-type batteries particularly in the North American market. LG notes that EV startups using cylindrical batteries are on the rise in the region, while demand for applications that use cylindrical-type batteries, such as electric tools, increases in line with the wireless trend. Tesla is one EV brand that uses cylindrical batteries, with Elon Musk stating in a tweet that …”probability of thermal runaway is dangerously high with large pouch cells. Tesla strongly recommends against their use.”

LG reports that its new manufacturing facility, located just outside of Phoenix, will be a fully automated smart factory with remote support, manufacturing intelligence, logistics automation, and more. The Arizona plant aims to establish LGES’s presence in North America cylindrical battery market while actively considering additional production in the future.

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