What’s Happening: LG Energy Solution (LGES) announced plans to invest approximately KRW 7.2 trillion (USD 5.5 billion) in building a battery manufacturing complex in Queen Creek, Arizona. The complex will have two manufacturing facilities, one for cylindrical batteries for electric vehicles (EV) and another for lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS).
Why It Matters: This marks the largest single investment ever for a standalone battery manufacturing facility in North America, quadrupling the company’s initial investment announced last year. The investment will help LGES expand its production capacity, develop stronger partnerships with customers, and reduce logistics costs. Furthermore, the company’s decision to increase investment in North America is driven by the rising demand for high-quality, locally manufactured EV batteries, supported by the Inflation Reduction Act’s EV tax credits.
Key Points:
- LGES plans to invest KRW 4.2 trillion (USD 3.2 billion) in a 27GWh cylindrical battery facility and KRW 3 trillion (USD 2.3 billion) in a 16GWh LFP pouch-type battery facility.
- Both facilities, totaling 43GWh, are set to break ground this year.
- The cylindrical battery facility aims to begin mass production of 2170 cells for North American EV makers in 2025.
- The LFP pouch-type battery facility, the first ESS-exclusive battery production facility globally, intends to start production in 2026.
- LGES aims to capitalize on the growing need for locally manufactured batteries in North America, the largest ESS market globally, supported by the Inflation Reduction Act and strong government policies promoting the adoption of ESS.
Bottom Line: LG Energy Solution’s $5.5 billion investment in an Arizona battery manufacturing complex highlights the company’s commitment to expanding its global production network and promoting clean energy transition in the United States. The investment aims to meet the rising demand for locally manufactured, high-performance batteries for electric vehicles and energy storage systems, further solidifying LGES’s presence in the industry. The new manufacturing facilities will employ state-of-the-art smart factory systems, enhancing product quality and increasing productivity to better respond to the growing battery demands in the region.
