- LG Energy Solution will supply Toyota with electric batteries for cars assembled in the United States
- “Inflation has pushed up investment amounts and labor costs have increased for various reasons. “said Youngsoo Kwon, CEO of LG Energy Solution, in an exclusive interview.
- LG Energy Solution will invest around $3 billion “to build new battery cell and module production lines exclusively for Toyota, scheduled for completion in 2025.”
South Korea’s LG Energy Solution has signed an agreement to supply lithium-ion batteries for electric vehicles to be assembled in the United States to Toyota, the world’s largest automaker, the companies said on Wednesday.
The deal will support Toyota’s growing range of battery electric vehicles, which includes a new model that will be assembled at a production plant in Kentucky – the largest in the world – starting in 2025.
“The only thing I wanted to change was the fact that we don’t have a deal with the number one player, Toyota,” LG Energy Solution CEO Youngsoo Kwon said in an exclusive interview with CNBC that aired Thursday .
“So now we have nine of the top 10 automakers as our customers,” Kwon said, adding that LG Energy Solution will supply 20 gigawatts worth of batteries to Toyota every year starting in 2025.
Toyota has been the world’s best-selling automaker for three years in a row, selling nearly 10.5 million vehicles in 2022.
Tokyo-listed shares of Toyota rose 2.91% in morning trading on Thursday.
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LG Energy Solution also supplies other automotive giants such as American General Motors, South Korea’s Hyundai and Japan’s Honda. Less than five months ago, LG Energy Solution announced it would partner with Hyundai to build a $4.3 billion electric vehicle battery plant in the U.S. to take advantage of tax credits.
Buyers of U.S.-made vehicles are eligible for tax credits of up to $7,500 under the Inflation Reduction Act.
“Inflation has pushed up investment amounts and labor costs have increased for various reasons. ” said Kwon.
LG Energy Solution will invest around 4 trillion Korean won ($3 billion) “to build new battery cell and module production lines exclusively for Toyota, scheduled for completion in 2025.”
The Japanese automaker plans to offer 30 battery-electric vehicle models from its Toyota and Lexus brands by 2030 and produce up to 3.5 million BEVs annually.
According to data from South Korean energy market research firm SNE Research, LG Energy Solution is currently the world’s third-largest electric vehicle battery maker after Chinese electric vehicle maker BYD.
Chinese companies dominate the sector even as electric vehicle adoption increases globally. According to SNE Research, China’s CATL remains No. 1, capturing 36.6% of the global electric vehicle battery market from January to July this year.
“It is essentially a competition between Chinese and Korean companies, although we also have the Japanese company Panasonic. I think it is still too early to fully assess the capabilities of Chinese battery manufacturers,” Kwon said.
“CATL mostly manufactures in China. Maintaining production in China is very easy. Since it is a global company, global activities must be included.”
“It was easy for us to stay in South Korea. But we faced enormous challenges both in Poland and in the USA. I think whether Chinese players will be successful with their global operations will be the factor that determines who wins between Chinese and Korean companies,” Kwon said.