LG Chem recently signed a long-term supply contract with Toyota Motor North America for the supply of secondary battery cathode materials, which is expected to amount to KRW 2.86 trillion by 2030.
According to industry analysis, the supply scale can produce 600,000 to 700,000 electric vehicles
An annual supply for 20GWh of batteries
LG Chem is the parent company of South Korean battery giant LG Energy Solution (LGES). Not long ago, on October 5, LG Energy Solution announced that it had signed an electric vehicle battery supply agreement with Toyota North America.
According to the agreement, starting in 2025, LG Energy Solution will deliver 20GWh of automotive battery modules to Toyota per year, which consists of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch batteries, which will be produced at LG Energy Solution’s plant in Michigan for use in new electric models produced at Toyota’s plant in Kentucky.
This is the largest single contract in the history of LG New Energy except for joint ventures. LG Energy Solution will supply batteries to Hyundai and Kia Motors (Korea), General Motors, Ford and Strantis (U.S.), Toyota and Honda (Japan), Volkswagen, Renault-Nissan (Europe), and Volvo (Geely).
LG Energy Solution plans to invest a total of 4 trillion won in the Michigan plant by 2025 to build a battery and module production line specifically for Toyota.
With the agreement between LG Chem and Toyota for the supply of cathode materials, LG and Toyota have established an integrated supply system from raw materials to batteries.
LG Energy Solution had said on April 26 that it had received requests from major automaker customers to increase battery supply since the US IRA came into effect, which could lead to more orders for it.
The two major cooperation between LG and Toyota is closely related to the IRA bill. LG Chem’s cathode material meets the core mineral requirements of the IRA Act, and Toyota’s electric vehicles are assembled in the United States, which allows Toyota to receive a full $7,500 tax credit per vehicle.
440 trillion won of the cumulative backlog of orders
With 9 major global automotive companies and high-quality customers such as Tesla, LG Energy Solution has built or will build production bases in Europe, Asia, North America and other places to meet the needs of customers for fast and stable supply in major markets around the world.
Strong customer orders correspond to clear capacity requirements. By the end of 2022, LG Energy Solution has a total production capacity of 200GWh, and plans to expand global production capacity to 300GWh by the end of this year and 540GWh by 2025.
Global competitive landscape
With the implementation of two independent factories and one cooperative factory in the United States this year, the number of battery production bases operated and under construction by LG Energy Solution has risen to 18.
But at the same time, CATL has comprehensively expanded its production capacity at home and abroad this year, continuously introduced new technologies, and ranked first in the world.
BYD’s external supply has accelerated, and it has made every effort to expand the overseas new energy vehicle market, gradually widening the gap with LG New Energy and firmly occupying the second position in the world.
According to SNE Research, from January to August this year, in the global ranking of top 10 companies in terms of installed capacity of power batteries, CATL continued to hold the first place with an installed volume of 158.3GWh and a market share of 36.9%. BYD ranked second, with an installed capacity of 68.1GWh, with a market share of 15.9%. LG New Energy ranked third, with an installed capacity of 60.9GWh, with a market share of 14.2%
