LG Energy to supply EV batteries to Rivian in $6.7 bn deal

LG Energy Solution Ltd., the world’s third-largest battery maker, is set to supply cells to Rivian Automotive Inc., a US electric vehicle manufacturer, in a deal estimated at $6.7 billion, adding to hopes for the South Korean company’s recovery through customer diversification amid the prolonged slowdown in the clean car market.

LG Energy said on Friday that its Arizona unit signed a deal with California-based Rivian to provide 67 gigawatt-hour (GWh) cylindrical batteries for five years. The 46-millimeter (mm) diameter, 95-mm long batteries will be installed in the Rivian R2 SUV set to debut in 2026, according to the Korean battery maker.

The deal’s value was estimated at $6.7 billion based on an assumed battery price of $100 per kilowatt-hour, industry sources in Seoul said, though LG and Rivian have yet to disclose financial terms.

“We have inked a number of major supply deals with the next-generation, 46-series cylindrical battery, accelerating the diversification of products and customers,” LG Energy said in a statement.

46 MM DIAMETER BATTERIES

The deal is expected to help LG Energy expand its footprint in the high-performance battery market, industry sources in Seoul said.

The 46-mm diameter cylindrical battery is being heralded as an industry game-changer as it is known to boost energy density by five times and output by six times compared with the conventional 2170 type featuring a 21-mm diameter and 70-mm length.

LG Energy said the batteries for Rivian consist of nickel-rich, nickel cobalt manganese aluminum (NCMA) materials to maximize energy density and ensure safety.

California-based Rivian was ranked as the most satisfying US auto brand in the 2024 JD Power US Automotive Performance, Execution, and Layout (APEAL) study. The R2 has generated popularity even before its launch, with pre-orders topping 100,000 units.

MADE IN ARIZONA

LG Energy plans to manufacture the batteries for Rivian at its Arizona plant, the company’s first facility dedicated to cylindrical batteries.

The factory now under construction is scheduled to launch commercial operations in 2026 with a plan to produce 46-mm diameter batteries, according to the company.

The plant is also expected to supply 50.5 GWh, 46-mm diameter cylindrical batteries to Mercedes-Benz AG in North America.

LG Energy, supplier to the world’s No. 2 EV manufacturer Tesla Inc., has been vigorously pursuing deals with other automakers.

Last month, the unit of Korea’s No. 4 conglomerate LG Group, inked deals estimated at $9.5 billion to supply battery cells and modules to US-based Ford Motor Co. in Europe.

In July, LG Energy clinched a multi-billion-dollar deal to supply lithium iron phosphate (LFP) batteries for low-end EVs to Renault Group’s EV unit Ampere.

Write to Hyung-Kyu Kim at khk@hankyung.com
 
Jongwoo Cheon edited this article.