LG Energy Solution (LGES) and Hyundai Motor Group announced a joint venture (JV) to manufacture battery cells in Bryan County, Georgia, for the U.S. electric vehicle market. The new facility represents a $4.3 billion capital investment and the Georgia facility will be located adjacent to a Hyundai manufacturing facility currently under construction.
The signing ceremony took place in LGES’s headquarters in Seoul, South Korea, with Youngsoo Kwon, CEO of LG Energy Solution and Jaehoon Chang, president and chief executive officer of Hyundai Motor, in attendance.
“Two strong leaders in the auto and battery industries have joined hands, and together we are ready to drive the EV transition in America,” said Youngsoo Kwon, chief executive officer of LG Energy Solution. “By further advancing our product competitiveness and global operational expertise, LG Energy Solution will commit our best efforts to offering the ultimate sustainable energy solutions to our customers.”
Hyundai Mobis, which is the parts supplier to Hyundai as well as other automotive manufacturers, will assemble battery packs using cells from the plant, then supply them to the Group’s U.S. manufacturing facilities for production of Hyundai, Kia and Genesis EV models.
The Inflation Reduction Act, passed in August 2022, includes $10 billion in tax credits for a variety of manufacturing facilities, including EV and battery manufacturing facilities. Since its passage, auto makers and battery companies have announced an estimated $11 billion in new investments into the North American EV battery supply chain. Panasonic opened a $4 billion factory in Kansas and is now eyeing Oklahoma, Toyota increased its commitment to a North Carolina battery production facility from $1.3 billion to $3.8 billion, and Statevolt intends to spend $4 billion on a factory in California. In March, LGES announced plans to invest $5.5 billion oin two manufacturing facilities in Arizona. One is intended to be for cylindrical batteries for electric vehicles and the other for lithium iron phosphate pouch-type batteries for energy storage systems.
Hyundai is committed to the electric transformation of the automotive industry. The company currently has three all-electric models and two plug-in hybrids. The annual production capacity of the new facility is estimated at 30 GWh, or enough to support the production of 300,000 units of EVs annually.
“Hyundai Motor Group is focusing on its electrification efforts to secure a leadership position in the global auto industry. We will create a strong foundation to lead the global EV transition through establishing a new EV battery cell plant with LG Energy Solution, a leading global battery producer and long-time partner,” said Chang.
Starting construction in the second half of 2023, the facility is expected to begin battery production at the end of 2025 at the earliest. With this JV, LGES now has seven battery plants currently operating or being constructed in the U.S., where the company is concentrating most of its resources to expand the production capacity.
LGES was formed in 2020 after being spun off from LG Chem, and it debuted on the Korea Exchange (KRX) in January 2022. In 2017 LG Chem was the first international player to enter the U.S. residential battery market, and now, as LG Energy Systems, focuses the burgeoning U.S. battery market for electric vehicles and energy storage systems. In January, LG Energy Systems announced that it will pursue 25% to 30% increase in the annual consolidated revenue in 2023, and plans to double its capex over the previous year; however, there is currently no indication as to whether those plans will change with this new, increased investment in U.S. manufacturing.
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