South Korean emobility majors join forces in US for EV battery gigafactory
LG Energy Solution (LGES) and Hyundai Motor Group have announced an EV battery cell manufacturing joint venture in the US, valued at $4.3 billion and estimated to have an annual manufacturing capacity of 30GWh, capable of supporting the production of 300,000 EV units annually.
LGES and Hyundai Motor Group announced the signing of a memorandum of understanding to produce EV batteries in the US and further accelerate the Group’s electrification efforts in North America.
LGES and Hyundai Motor Group will each hold a 50 per cent stake in the joint venture (JV), which will involve an investment of over $4.3 billion (KRW 5.7 trillion).
The facility will be in Bryan County, Savannah, Georgia, adjacent to Hyundai Motor Group Metaplant America, currently under construction.
Starting construction in the second half of 2023, the JV plans to start battery production at the end of 2025 at the earliest.
Hyundai Mobis will assemble battery packs using cells from the plant, and then supply them to the Group’s US manufacturing facilities for production of Hyundai, Kia and Genesis EV models.
The new facility is hoped to help create a stable supply of batteries in the region and allow the Group to respond fast to the soaring EV demand in the US market.
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Competitive US market
With the JV, LGES now has seven battery plants currently operating or being constructed in the US, where the company is concentrating most of its resources to expand the production capacity.
Earlier this year LGES reported record-breaking order backlog of its battery cells; demand has been spurred for the company’s solution by the favourable EV tax credits offered up by the Inflation Reduction Act in the US.
The end of the 2022 financial year marked for the company a significant financial milestone as “a record-high annual revenue was made possible, as battery shipment has increased across all product line-ups in our proactive response to the increased demands for EVs and power grid energy storage systems (ESS),” explained Chang Sil Lee, CFO of LG Energy Solution at a conference call announcing the company’s 2022 earnings of KRW1.2 trillion ($905 million) in operating profit.
Most of the company’s earnings have been attributed to the competitive energy and EV market in the US, where companies are being spurred competitively by the IRA.
With this latest JV, by ramping up its local production, LGES hopes to provide its products both on a larger scale and with speed.
The signing ceremony took place in LGES’s headquarters in Seoul on May 26 with the attendance of Youngsoo Kwon, CEO of LG Energy Solution and Jaehoon Chang, President and CEO of Hyundai Motor Company.
