LG Energy To Invest $5.5 Bn To Construct Standalone Battery Plants In US

LG Energy Solution (LGES) announced on Friday that it will spend 7.2 trillion won (USD 5.56 billion) on its second standalone battery manufacturing site in the United States, sticking to its earlier plan after some thought.

LGES will spend 4.2 trillion won to construct a cylindrical battery plant in Queen Creek, Arizona, with an annual production capacity of 27 gigatonne hours, enough to power 350,000 all-electric vehicles, according to a company release.

LGES owns and operates an independent battery factory in Michigan. According to Yonhap news agency, it will invest 3 trillion won to construct a separate facility on the same site to manufacture lithium iron phosphate (LFP) batteries for energy storage systems (ESS), with an annual production capacity of 16 GWh.

The decision reached earlier in the day at a board meeting, represents a significant increase in the Arizona investment over the initial 1.7 trillion won plan revealed in March last year. The original investment did not include the LFP factory plan.

LGES, the world's second-largest battery manufacturer after China's CATL, cancelled the plan a few months later, citing expense increases due to global inflation.

However, during the most recent earnings call in January of this year, LGES stated that it was contemplating resuming the plan.

It has been speculated that the proposed Arizona plant will be constructed to serve Tesla vehicles in the United States, in order to qualify for new US government subsidies for EV and EV battery makers investing in the United States under the new Inflation Reduction Act (IRA).

LGES provides batteries to Tesla in China.

The new cylindrical battery factory will begin construction this year and is scheduled to open in 2025. According to LGES, it will manufacture the widely used 2170 cylindrical cells and serve major US clients.

The LFP battery facility will produce pouch cells. Commercial operations are scheduled to commence in 2026.