Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
LGES on aggressive U.S. expansion with Stellantis tie-up
By Kim Bo-eun
LG's battery affiliate to accelerate IPO drive
By Kim Bo-eun
LG Energy Solution (LGES) is aggressively expanding its presence in the fast-growing U.S. market for electric vehicles (EVs), unveiling plans for its second joint venture with a global carmaker, Monday. LGES has moved quickly to recover from the fallout over GM EV battery fires, accelerating the process to debut on the local stock market.
LG's battery-making affiliate stated it has signed a partnership with Stellantis, the world's sixth-largest automotive group, to jointly produce EV batteries. Stellantis launched in January as a merger of Fiat Chrysler Automobiles and PSA Group, and its brands include Jeep, Ram, Dodge and Fiat.
The battery plant's production capacity will be 40 gigawatt-hours on an annual basis, and construction is set to be completed by the first quarter of 2024. The plant's location in the U.S. has yet to be decided.
This is LGES's second tie-up with a global carmaker, after Ultium Cells, its joint venture with GM. Two battery plants are being constructed under Ultium Cells, one in Lordstown, Ohio, and the other in Spring Hill, Tennessee.
LGES said the latest joint venture with Stellantis will increase its production capacity in the U.S. to 150 gigawatt-hours on an annual basis by 2025. LG also has its own production plant in Michigan, and is planning to build more independent plants.
LG and other battery makers are rushing to expand production in the U.S., as the market is projected to grow exponentially in the coming years.
“Together, we will lead the industry with benchmark efficiencies and deliver electrified vehicles that ignite passion,” Stellantis CEO Carlos Tavares was cited as saying in a press release.
“LGES will position itself as a provider of battery solutions to our prospective customers in the region by utilizing our collective, unique technical skills and mass-producing capabilities,” LG Energy Solution President and CEO Kim Jong-hyun said.
Stellantis and LG Energy Solution's logos / Courtesy of LGES
The batteries produced at the LGES-Stellantis plant will be supplied to the carmaker's factories in the U.S., Canada and Mexico. Stellantis earlier unveiled plans to pour 41 trillion won ($34.57 billion) into making the switch to EVs by 2025.
The latest tie-up comes after SK On, SK Group's new battery unit, announced a joint venture with Ford. Samsung SDI has yet to join hands with a global carmaker to jointly produce batteries. Earlier, there had been speculations that Samsung SDI could set up a joint venture with Stellantis. Samsung's battery affiliate has maintained it is reviewing multiple possibilities.
For battery makers, a joint venture enables stable supply to a key client. Carmakers seek tie-ups because they want greater control over battery supply.
LGES is quickly seeking to recover from the losses sustained from recalls of GM's Chevrolet Bolt EV, due to cases of battery fires. LGES batteries were installed in the model. LG Energy Solution and LG Electronics shouldered a total of $1.2 billion of costs associated with the recall.
Repeated battery fires posed a burden for LGES, which had been seeking an IPO on the main KOSPI bourse within this year. LGES' parent company LG Chem's stock fell following the recall decision, and the battery maker had planned to delay the IPO to a later time when it could obtain a better valuation. A stock market listing is an imperative for the battery maker, given the massive scale of investments needed in setting up a production plant under the new joint venture with Stellantis.
But LG Chem's stock closed at 827,000 won, Monday, down 1.08 percent from Friday's close.