April 30, 2024

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(LG Energy Solution)

LG Energy Solution (LGES), South Korea's leading battery maker, said Thursday it has begun the construction of its $5.5 billion battery plant in Arizona, with an aim to start operations in 2026.

LGES plans to produce 46-Series cylindrical batteries for electric vehicles (EVs) and lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS) in the Arizona plant, the company said in a statement.

"This is the second stand-alone facility (of LGES) to be built in the US And it is also the first manufacturing facility to produce cylindrical batteries in the US Right here is where we can build quality cylindrical batteries, which will be used to power millions of EVs," Brian Oh, head of the mobility & IT battery division at LG Energy Solution, said in the statement.

LGES has its first stand-alone battery plant in Holland, Michigan, which was built a decade ago. Other plants in North America in operation or under construction are all under joint ventures with major carmakers.

In Korea, LGES plans the first mass production of 46-Series batteries at its Ochang plant as early as August for delivery to its customers, which is the earliest among major global battery makers.

Tesla uses the cylindrical batteries for its models, and other carmakers, such as Stellantis and BMW, reportedly are considering adopting the batteries for their future EVs.

Cylindrical batteries are small and round, making it possible for them to be stacked in devices of all sizes. Compared with other battery formats, the cylindrical type can pack more power and is seen as relatively safe.

By producing LFP ESS batteries in the Arizona complex, LGES expects to timely respond to the fast-growing needs for locally manufactured batteries on the back of the US clean energy policies, the statement said.

LGES' investments in battery facilities in the US represent its "full-fledged" efforts to provide Inflation Reduction Act (IRA) compliant batteries to its customers, it said.

The IRA gives up to $7,500 in tax credits to EV buyers whose vehicles were assembled in North America and made with minerals mined and processed in the U.S. or countries or regions that have free trade agreements with Washington.

When completed, the Arizona plant's annual output capacity is expected to reach 36 gigawatt-hours of cylindrical batteries and 17 GWh LFP ESS batteries.

In North America, LGES currently operates three battery cell plants -- the first and second plants under the JV with GM, and one in Holland, Michigan. Plants under JVs with GM, Hyundai Motor Group, Honda Motor and Stellantis N.V. are being constructed in the US states of Michigan, Georgia and Ohio, as well as Ontario, Canada, respectively.

In other regions, the company has plants in South Korea, Poland and China, with a plant set to start production in Indonesia in the first half of 2024. (Yonhap)