LG Chem, Material Companies, and Automakers Form 'Triangular Alliance' for Global Expansion

[Asia Economy Reporters So-yeon Park, Yoon-joo Hwang] LG Chem has embarked on building a robust electric vehicle (EV) battery ecosystem in collaboration with domestic and international automakers and material companies. While planning battery joint ventures with automakers such as the American General Motors (GM), China's Geely, and Hyundai Motor Company, LG Chem is accelerating its battery business by partnering with POSCO Chemical, the only major battery material company in Korea. With a stable supply chain for EV battery raw materials secured, the company is widely regarded as being on the verge of becoming the world's leading EV battery manufacturer.

◆ Securing mid- to long-term battery materials for 2 million vehicles = The scale of cathode materials LG Chem plans to procure from POSCO Chemical is approximately 120,000 tons. Including contracts previously signed with global cathode material supplier Umicore, LG Chem has secured enough materials to supply batteries for 2 million high-performance EVs (with a driving range of over 380 km). This contract is said to be based on a long-standing trust relationship with POSCO Chemical.

The reason LG Chem has consecutively signed mid- to long-term contracts with material suppliers is the recognition that securing materials is paramount to meeting the rapidly increasing demand for EVs. The EV battery market currently faces a significant supply shortage compared to demand.

According to SNE Research, a market research firm specializing in EV batteries, the global EV volume this year is estimated at about 8.5 million units, representing approximately 40% growth compared to 2019 estimates. The market is expected to grow rapidly to 22 million units by 2025 and 37 million units by 2030, with EVs projected to account for 30% of the total automobile market by 2030.

LG Chem is particularly focusing on the European market. While the total EV battery energy capacity in the U.S. and China declined by about 30% last year, Europe saw an increase of over 50% during the same period. This growth is attributed to the European Union (EU) implementing stringent carbon dioxide regulations starting this year, which is driving up EV demand.

◆ Close collaboration with domestic and international automakers = Meanwhile, LG Chem is aggressively pursuing joint ventures (JVs) with global automakers to strengthen competitiveness in key EV markets. Close partnerships with suppliers are essential to leading the EV battery market. LG Chem is currently establishing joint ventures with China's Geely and the U.S.'s GM to build battery plants in China and the U.S., respectively, and is also in discussions with Korean automaker Hyundai Motor Company regarding a battery joint venture.

By the end of 2021, LG Chem plans to complete the establishment of a 10 GWh EV battery joint venture with Geely in China, and in the third quarter of this year, it intends to commence construction of a 30 GWh EV battery cell joint venture with GM. LG Chem plans to expand its strategic alliances with automakers while pursuing a spin-off of its battery division to fully focus on the battery business. The company has also secured financial resources for active investment. Last month, LG Chem signed a long-term financial cooperation agreement with the Korea Development Bank, Export-Import Bank of Korea, and NongHyup Bank to receive $5 billion (approximately 5.9 trillion KRW) over the next five years for global secondary battery facility investments.

An industry insider commented, "LG Chem has secured stable suppliers through cooperation with POSCO Chemical while maintaining independent technological capabilities, and is actively pursuing joint ventures with leading global automakers to enhance investment stability. It is expected that LG Chem will secure leadership in the rapidly growing EV market based on its excellent technology and supply capacity."

Reporters So-yeon Park & Yoon-joo Hwang muse@

This content was produced with the assistance of AI translation services.