South Korean LG Chem’s [051910:KS] battery subsidiary LG Energy Solution (LGES) and automaker Stellantis N.V. [STLA:US] inked a memorandum of understanding (MOU) to set up a joint venture (JV) in North America to produce electric vehicle (EV) batteries, as reported by the Korea Herald on October 18. Under the MOU, a battery manufacturing plant will start construction in the second half of 2022 and begin mass production in 1Q24. The annual production capacity of the battery plant targets 40 gigawatt-hours (GWh). Stellantis will install those batteries on pure and plug-in hybrid EVs produced in its automobile factories in the US, Canada, and Mexico, in order to support its target of selling 40% of EVs by 2030. The location of the battery plant and other details will be disclosed later.
LGES is one of the major battery makers in South Korea. In the first quarter of 2021, LGES ranked second globally in terms of battery installation capacity, which stood at 9.8GWh, only behind the 15.1GWh of China’s CATL [300750:CH]. This year, LGES is accelerating its deployment in the EV battery industry. Prior to Stellantis, LGES reached a partnership with another South Korean conglomerate Hyundai Motor Group (HMG) in late July to establish a 50-50 JV in Indonesia, with an aim to produce EV batteries for HMG’s automobile subsidiaries Hyundai Motor [005380:KS] and Kia [000270:KS]. The total investment is set to be USD1.1bn and the plant is estimated to be completed by the first half of 2023. In the same month, LG Chem and LGES also announced their KRW15.1tr (USD13.17bn) investment plans into the EV battery sector over this decade. Including KRW12.4tr from LGES, the company aims to increase its annual production capacity to 260GWh in 2023, equivalent to the installations on 3.7m EVs.