LG Energy Solution to Achieve 'Economies of Scale'

Additional 140GWh Electric Vehicle Battery Production Facilities to be Built Within 3 Years

200GWh Pouch-Type and 60GWh Cylindrical-Type Annual Production Capacity

Poland Plant Under Continuous Expansion

Securing Leading Position in Rapidly Growing Electric Vehicle Market

Maximizing Profits in Battery Business

[Asia Economy Reporter Park So-yeon] LG Energy Solution, spun off from LG Chem’s battery division, has decided to realize economies of scale through aggressive facility expansion. The plan is to expand battery production bases at the forefront of the electric vehicle markets in the U.S., Europe, and China, while maximizing production efficiency to start full-scale profit realization.

According to industry sources on the 14th, LG Energy Solution has set a mid-to-long-term plan to secure an annual production capacity of 200GWh for pouch-type electric vehicle batteries and 60GWh for cylindrical-type electric vehicle batteries by 2023. Pouch-type batteries are supplied to general electric vehicle models such as Hyundai Motor, GM, and Volkswagen. An annual production volume of 200GWh can supply batteries for approximately 3.2 million electric vehicles. Cylindrical-type batteries are supplied to Tesla, Lucid Air, and others, and a 60GWh annual production capacity can supply about 960,000 vehicles.

To realize these goals, LG Energy Solution will expand domestic and overseas electric vehicle battery production facilities (with an annual capacity of 120GWh) and add 140GWh of production facilities over the next three years starting this year. First, the LG Poland electric vehicle battery plant, the world’s largest battery production base, currently has a capacity of 70GWh and has plans for continuous expansion. This plant, considered LG Energy Solution’s main factory, will continuously expand production lines according to order schedules. The Nanjing Battery Plants 1 and 2 in China will double their current 15GWh capacity to over 30GWh by 2023. Cylindrical batteries produced at the Nanjing small and IT battery plant and the Ochang plant in Chungbuk will also increase from the current 20GWh scale to about 60GWh, tripling production capacity. Additionally, through the battery joint venture (JV) with GM, ‘Ultium Cells,’ about 30GWh of electric vehicle battery production facilities will be additionally secured.

LG Energy Solution’s aggressive facility expansion in such a short period is aimed at securing a leading position in the rapidly growing electric vehicle market. At the same time, the strategy is to maximize profits after turning the electric vehicle battery business profitable by realizing economies of scale. Other battery companies currently estimate that it will take about 2 to 3 years to convert battery facility investments into profits. LG plans to accelerate the harvest time and increase the scale. A representative from LG Energy Solution said, "This year must be a year where results come not only in sales but also in operating profit," adding, "It is now time to deliver returns to investors."

Meanwhile, LG Energy Solution is also hastening its initial public offering (IPO) to secure investment funds. There are forecasts that listing could be possible as early as the second half of this year. The securities industry estimates LG Energy Solution’s corporate value at a minimum of 50 trillion KRW. Due to the ultra-fast growth of the secondary battery industry, some analyses suggest it could reach up to 100 trillion KRW. The investment banking (IB) sector expects LG Energy Solution to secure more than 10 trillion KRW through the IPO.

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