LG Chem opens mega battery plant in China

LG Chairman Koo Bon-moo, center, pushes a button to mark the opening of the firm's new battery plant in Nanjing, China, Tuesday. On Koo's right is Korean Ambassador to China Kim Jang-soo. / Courtesy of LG Chem

World's top battery maker eyes W1.5 tril. sales in 2020

By Kim Yoo-chul

LG Chem, the world's top battery maker by annual sales, aims to generate 1.5 trillion won ($1.3 billion) from sales over the next five years in China.

The target is about 30 percent more than chief local rival Samsung SDI's planned $1 billion sales there by 2020.

"LG Chem has secured 16 carmakers for the company's batteries for use in all types of electric vehicles (EVs), with all ‘top-tier' Chinese carmakers being included in LG's supply chain management," C.S. Song, head of LG Chem's public relations office, told The Korea Times.

Song said LG will increase battery production at its cutting-edge factory in Nanjing, China to meet demand.

The three-story LG factory could theoretically produce 50,000 batteries for advanced pure EVs a year, meaning the plant could also be used to supply up to 180,000 battery packs for plug-in hybrid EVs (PHEVs).

The plant is the result of collaboration with two Chinese firms and construction began in October last year, the company said.

The plant's opening comes as LG Group shifts its focus to non-consumer businesses such as battery and automotive solutions, which are less volatile and cyclical.

To counter a steep decline in sales of LG affiliates, the LG Chem's battery factory is expected to have a crucial role in filling profit voids left by LG Electronics, LG officials said.

"This is a huge step for LG Chem," Kwon Young-soo, head of LG Chem's battery division, said. "All of LG's key resources will be put into the facilities. We thank the Nanjing government as the local government provided substantial financial and administrative support for the project."

Asked about future investment plans for the plant, Song said the company will boost annual production capacity to 200,000 batteries by 2020 (700,000 units for PHEVs), which the company believes is enough to maintain its firm leadership in the global EV battery market.

The Chinese plant is LG Chem's third battery plant, following one in Korea and another in the U.S. state of Michigan. LG said its Michigan and Nanjing plants will take orders from customers in the United States and China, while the Ochang plant will be used as a hub for new research projects.

LG Chem said it plans to build a battery plant in Europe, though Song declined to specify.

"LG Chem's target price was revised up to 400,000 won per share," said Baek Young-chan, an analyst at Hyundai Securities. "The EV market is booming."

Before 2020, China will build more than 5 million charging stations to boost the transition from internal-combustion engine-based cars to EVs, officials said.

Demand for EVs will rise to 6.3 million by 2020 from 2.2 million in 2014, with China taking a crucial role. In 2013, some 19,000 EVs were sold, with sales rising 400 percent to 80,000 last year and expected to rise to 160,000 this year, market research firms said.

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