By Kim Yoo-chul
Staff Reporter

LG Chem has struck an agreement with China's Chongqing Changan Auto for cooperation in the electric vehicle battery business.

The overseas agreement is the second after LG Chem clinched a mutual partnership with General Motors (GM) of the United States for batteries last year.

The nation's top chemical firm will ship lithium ion batteries for Chongqing Changan's hybrid vehicles in the second half of this year, the company said in a statement.

Chongqing Changan, which has already introduced a hybrid van dubbed "CV11" last year in China, plans to sell a hybrid sedan called "CV8" next month. Officials say China's third biggest automaker will use lithium ion batteries in its hybrids moving away from nickel batteries from the second half of this year.

"The latest agreement will pave the way for LG Chem to keep its current leadership in the electric vehicle battery market," its CEO Kim Bahn-suk said.

"More deals will come. LG Chem has been in detailed talks with major carmakers in the United States, Europe and Japan to supply our lithium ion batteries," the top company executive said, adding it would set bigger budgets for research and development (R&D) of the electric car battery business.

Industry watchers say LG Chem has engaged in talks with Ford of the United States and Volkswagen, Germany's largest automaker, to supply its lithium ion car batteries.

"The deal will be positive for LG Chem as China is emerging as the world's top car market. LG Chem will continue its bullish move as it is very near to an additional partnership," an analyst of Hi Investment said.

LG Chem last year said it would invest 1 trillion won in an electric car battery plant over the next four years, aiming to collect 2 trillion won in total revenue from the battery business alone by 2015.

The company will ship its lithium ion batteries to GM, Eaton and CT&T.

It also plans to set up a joint battery venture with Hyundai Mobis, the auto parts making unit of Hyundai Motor Group. Hyundai Motor launched its first hybrid car in South Korea last July.

The demand for electric vehicles will grow to 3.3 million globally by 2013, while the adoption rate for lithium ion batteries is expected to reach 40 percent or 2 trillion won, market research firms say.

yckim@koreatimes.co.kr