LG Chem clinches EV battery contract with Chrysler

LG Chem said Monday it has signed a deal with the U.S.-based automaker to supply batteries for the Chrysler Pacifica plug-in hybrid minivan, seen in this photo. / Courtesy of Chrysler website

By Lee Min-hyung

LG Chem has signed a battery supplement deal with Chrysler, diversifying its distribution channels in the North American market.

The world’s leading supplier of electric vehicles (EV) batteries said Monday that it will supply 16 kWh battery cells and battery management systems (BMS) for Chrysler’s Pacifica plug-in hybrid minivan to be manufactured from the end of this year.

With the deal, LG Chem is now in business with all of the so-called “Big Three” clients in the U.S. automobile market, having previously signed contracts with GM and Ford. In 2009, LG Chem was named the exclusive supplier of EV batteries for the GM Volt. The company also signed a deal with Ford in 2010.

Under the deal, LG Chem secured hundreds of billion won in sales ― but the company did not disclose the exact amount.

The latest EV battery contract will help the company tighten its grip in the mid to large battery business, for which it produces EV batteries and energy storage systems (ESS). Currently, the largest portion of its revenue comes from this segment.

“The deal will play a crucial part in our plan to generate 1.2 trillion won in EV battery sales this year,” said an LG Chem spokesman. Last year, the company recorded 700 billion won in EV battery sales, while ESS sales have yet to catch up to that level due to market infancy.

The company plans to manufacture EV batteries at its facility in Michigan. LG Chem built the factory in 2012 to meet the growing demand from its U.S. clients. As of the end of last year, the company is running four production lines there.

In the U.S., the company can produce batteries for more than 120,000 plug-in hybrid EVs (PHEVs) each year. Its Korean production line holds a capacity for some 350,000 PHEVs, followed by 180,000 in China.

Under its R&D initiative, the company established LG Chem Power (LGCPI) in the U.S. in 2000, engaging in developing and manufacturing various battery products.

Lee Ung-beom, president of LG Chem’s energy storage division, said in a statement, “We are going to push for leadership in the global battery market, backed by a strong alliance with the big three U.S. clients.”

So far, LG Chem has formed EV battery partnerships with 20 automakers in major markets in the U.S., China and Germany.

The global EV battery market is expected to be worth $18.24 billion by 2020, surging more than five times from $3.26 billion in 2013, according to market researcher B3.