LG Energy considers billion-dollar battery plant in Arizona

South Korea’s LG Energy Solution Ltd. may build a billion-dollar battery plant in the US state of Arizona to meet growing demand in North America, one of the world’s fastest-growing electric vehicle markets.

According to media reports on Tuesday, LG Energy, the world’s second-largest electric vehicle battery maker, has obtained approval on an area development project for the construction of a 1.7 trillion won ($1.3 billion) manufacturing facility, widely thought to be an EV battery plant, in Queen Creek, Arizona.

The development project is expected to create some 2,800 new jobs, according to the reports.

In response to the reports, an LG Energy official said: “We are considering an investment project in Arizona, but it hasn’t been finalized.” The company declined to confirm the reported value of the project.

Industry watchers said the Arizona plant, if confirmed, will be supplying batteries to Arizona-based electric semi-truck manufacturer Nikola Corp.

In November of last year, LG signed a battery supply deal with Nikola.

DEAL WITH NIKOLA

According to the US electric vehicle startup’s earnings report at the time, the two companies have entered a long-term battery supply deal, in which LG Energy will provide battery cells to Nikola from 2022 through 2029.

Nikola delivered its first battery-electric vehicle (BEV) in December in a pilot program with Total Transportation Services Inc., a port trucking company in southern California.

The Arizona factory, if confirmed, will be LG Energy’s second standalone battery plant in the US.

LG runs its own battery plant in Michigan and last month, it said it is spending $1.7 billion to expand its annual battery production capacity in Holland, a city in the US state of Michigan, by fivefold to 25 gigawatt hours (GWh) by 2025 from the current 5 GWh.

LG Energy Solution Michigan Inc., which began operations in 2012, has been supplying batteries to major US automakers, including General Motors Co., Ford Motor Co. and Chrysler.

Separately, LG Energy is running a battery joint venture, Ultium Cells LCC, with its partner GM in the US.

AIM TO OVERTAKE CATL

LG Energy Chief Executive Kwon Young-soo said earlier this year the company is aggressively expanding facilities in the US to overtake China’s Contemporary Amperex Technology (CATL), the EV battery market leader, within the next few years.

In January, LG and its US partner GM announced a $2.6 billion project to build their third EV battery plant in Lansing, Michigan, with a capacity of up to 50 GWh, enough for 700,000 EVs that can drive 500 kilometers on a full charge.

LG and GM are also said to be considering their fourth plant, with an expected annual production capacity of 30 GWh.

Currently, Ultium is already building two 35 GWh battery plants, one in Ohio and the other in Tennessee. The Ohio factory is set to begin operations this year and the Tennessee facility is slated to start production in 2023.

In October of last year, the Korean company said it is also launching a JV with the world’s No. 4 carmaker Stellantis N.V. to build a battery manufacturing facility in the US. The JV is looking for a site for a plant with a 40 GWh capacity, aiming to break ground in the second quarter and start production in the first quarter of 2024.

When LG’s own plant in Michigan and its JVs with GM and Stellantis are fully up and running, the Korean company’s total capacity in the US will reach more than 200 GWh, the largest among battery makers in the North American market.

Write to Hyung-Kyu Kim at khk@hankyung.com
In-Soo Nam edited this article.