LG Energy to supply $765 million batteries to Japan’s Isuzu Motors

LG Energy Solution Ltd., one of the world’s leading battery makers, has agreed to supply its cylindrical batteries to Isuzu Motors Ltd., Japan’s top commercial vehicle and diesel engine maker.

The two companies recently agreed to jointly push for Isuzu’s truck electrification project, people familiar with the matter said on Tuesday.

Under the deal, LG Energy, a unit of South Korea’s LG Group, will supply cylindrical batteries to Isuzu for the Elf, the Japanese firm’s mid-size truck, over four years from 2023, according to the sources.

The deal’s value wasn’t known, but is estimated at over 1 trillion won ($765 million), the people said.

Isuzu Motors controls 33% of Japan’s commercial vehicle market but hasn’t yet produced any electric trucks.

LG Energy will be supplying its batteries for Isuzu’s electric version of the Elf, which the Japanese automaker plans to manufacture at its factory in Fujisawa, Kanagawa Prefecture from next year.

The Elf, a diesel-powered truck, is one of the best-selling light-duty models sold not just in Japan but in global markets, including the US.

In Korea, Isuzu has been selling the Elf since 2017 and ranked fourth among imported commercial vehicles in the first half of this year.

ELECTRIC VERSION OF THE ELF

“In the 1-ton EV truck segment, Chinese companies are rapidly gaining ground in Japan. Isuzu joined hands with LG to expand its presence in the 2-ton and 3-ton EV truck market,” said an industry official.

The 3.5-ton electric Elf with 150kw power will have a 150-km range on a single charge, suitable for short-distance product delivery, according to the sources.

Isuzu will take the EV truck to North America, Australia and Korea after initial sales in Japan, they said.

LG, which began mass producing cylindrical batteries in 1999, has already been supplying its pouch-type batteries to Nissan Motor Co. for the Ariya EV. The Korean company is also in talks with Honda Motor Co. to launch a battery joint venture in the US.

“Panasonic is supplying most of its batteries to Tesla. So, Japanese carmakers are looking to other companies for batteries and LG is one of their favorite suppliers,” said an industry official.

LG Energy counts more than 10 carmakers, including General Motors, Ford Motor, Renault Group, Volkswagen, Audi, Jaguar, Tesla and Lucid Motors, as its battery clients.

LG’s order backlog stood at some 300 trillion won at the end of 2021.

LG LOOKS TO OVERTAKE CATL

The company has spent over 5 trillion won on battery research and development in the past decade and currently owns 24,066 battery-related patents, compared with about 4,000 patents owned by China’s Contemporary Amperex Technology Co. Ltd. (CATL), the world’s top battery maker.

LG has been particularly active in expanding its facilities in the US, one of the world’s largest electric vehicle markets.

The company is building a 1.7 trillion won new battery manufacturing facility in the US state of Arizona.

It also runs its own battery plant in Michigan and separately operates a joint venture, Ultium Cells LCC, with its partner GM in the US.

LG Energy Chief Executive Kwon Young-soo said earlier this year the company is aggressively expanding facilities to overtake market leader CATL within the next few years.

Write to Il-Gue Kim, Hyung-Kyu Kim and Han-Shin Park at Black0419@hankyung.com
In-Soo Nam edited this article.