LG, Poland’s ICPT in mega-million-dollar battery module supply deal

South Korea’s LG Energy Solution Ltd. said on Friday it has signed a multiyear deal to supply battery modules to Poland’s Impact Clean Power Technology S.A. (ICPT), Europe’s largest heavy-duty battery system maker for commercial electric vehicles.

LG Energy, a leading global battery maker, will supply a total of 200,000 nickel-cobalt-manganese (NCM) battery modules from its plant in Warsaw to ICPT for three years from 2024.

The companies didn’t reveal the deal’s value but industry watchers said it would be worth hundreds of billions of won, or hundreds of millions of dollars.

LG said it will deliver 200,000 units of NCM battery modules, enough to power 3,000 large commercial EVs such as trucks and busses, to ICPT’s GigafactoryX in Pruszkow, near Warsaw, where the modules will be assembled into battery packs and systems.

Assembled battery packs and systems will be supplied to Poland’s Solaris Bus & Coach, the largest electric bus manufacturer in Europe.

With the entire process from the manufacturing of battery modules, packs and systems to electric bus production taking place in Poland, the deal will establish a comprehensive supply chain for Europe’s electric public transportation system, LG said.

“Our partnership with ICPT, a highly trusted battery systems provider for public transportation, presents us with an exciting opportunity to introduce our outstanding battery technology to the fast-growing commercial vehicle market in Europe,” said Hong Seung-taek, head of Advanced Automotive Battery OTS Marketing Department at LG Energy.

“Capitalizing on our Warsaw plant, the largest battery manufacturing facility in Europe, we are committed to establishing a robust supply chain in the region and expediting its transition to sustainable mobility.”

HIGH TECH REQUIRED FOR COMMERCIAL VEHICLE BATTERIES

LG said the supply agreement marks a major milestone for both companies in solidifying technological leadership in the highly demanding commercial vehicle sector.

Batteries for commercial vehicles such as electric buses must withstand a much higher energy flow – up to 11 times more than passenger EVs – thus LG applies NCM chemistry to its batteries to enhance their durability and driving range.

Korean battery makers mostly produce NCM batteries, more expensive than their counterparts lithium iron phosphate (LFP) batteries, largely made by Chinese companies such as Contemporary Amperex Technology Co. (CATL) and BYD.

Although lower in energy density, demand for LFP batteries is growing as automakers rush to roll out more affordable EVs.

Located in Biskupice Podgorne, LG Energy’s Polish battery plant with a production capacity of 70 GWh manufactures battery modules and components in completed form so that they are ready for vehicle installation, it said.

“Our partnership with LG Energy Solution will strengthen our leading battery offering in the bus market,” said Bartek Kras, vice president of ICPT. “Considering the strong global demand, this is a significant added value for this sector. We can offer both our current and new customers assurance of the highest quality and guaranteed supply.”

Write to Sungsu Bae at baebae@hankyung.com

In-Soo Nam edited this article.