LG Expands US Battery Hub from Northeast to South

Currently, three or more additional sites, including joint plants in Holland, Michigan, and Rose Town, Ohio, are to be selected
Southern Tennessee is a strong candidate... Likely near a finished car plant
Possibility of operating the Georgia plant if SK Innovation withdraws from the US

A factory being built by Ultium Cells, a joint venture between LG Energy Solution and General Motors (GM), in Rose Town, Ohio, USA. Construction is underway with the goal of starting operations next year, and it plans to produce batteries with an annual capacity of 35GWh.

[Asia Economy Reporter Choi Dae-yeol] As LG Energy Solution plans to increase its number of medium-to-large battery factories in the United States to at least three, attention is focused on which regions these will be located. Previously, the Holland plant, which began operations in 2012, and the joint venture with General Motors (GM) are located in northeastern regions such as Michigan and Ohio. This area, centered around Detroit, is densely packed with automobile assembly plants and symbolizes the U.S. automotive industry. There are about nine assembly plants mainly operated by U.S. makers like GM and Ford, making it a region historically known for its many auto parts suppliers.

Although the company has not disclosed specifics, it is reported that the southern state of Tennessee is a strong candidate for the second plant site under consideration by the LG-GM joint venture. Tennessee is home to LG, the closely connected GM, and Volkswagen plants. Volkswagen is known to be expanding its plant here to use it as an electric vehicle factory.

Just south of Tennessee, the states of Alabama, Georgia, and South Carolina host U.S. plants of Hyundai Motor and Kia, as well as assembly plants for BMW and Mercedes-Benz. BMW and Mercedes-Benz have traditionally produced internal combustion engine vehicles at these plants but have announced plans to produce electric vehicles in the future. Hyundai and Kia are reportedly not yet planning to manufacture electric vehicles directly in the U.S. However, if they establish electric vehicle production lines domestically, it is highly likely they will use their existing Alabama and Georgia plants, which currently produce internal combustion vehicles.

Volkswagen factory in Chattanooga, USA

Considering these factors, it seems plausible that LG and GM have pinpointed Tennessee as the location for their second joint venture plant. BMW, Mercedes-Benz, Hyundai, and Kia are all customers that use LG batteries. Given that the Joe Biden administration plans to impose additional taxes on electric vehicles not produced locally, non-U.S. makers are also likely preparing to manufacture vehicles domestically. LG, which produces and sells batteries, cannot help but consider the locations of existing assembly plants.

LG Energy Solution is also expected to select sites for two additional plants it will operate independently with similar considerations in mind. The trend appears to be expanding gradually southward starting from Michigan. LG plans to invest more than 5 trillion won over the next five years to build at least two new battery factories. The company stated that it will decide on two sites within the first half of this year and may build additional plants depending on market conditions.

LG anticipates rapid growth in the local electric vehicle market as well as increased demand for other applications such as energy storage systems (ESS). They will manufacture cylindrical batteries locally, which are favored by popular North American electric vehicle makers like Tesla and local EV startups. Until now, LG has produced cylindrical batteries only in select regions such as Korea and China, supplying mostly pouch-type batteries.

Battery factory SK Innovation is building in Georgia, USA

The outcome of the agreement between LG and SK Innovation has also emerged as a variable. The two companies have been engaged in litigation at the U.S. International Trade Commission (ITC) over trade secret infringement, with SK losing and receiving a 10-year import ban. If SK does not reach an agreement with LG by next month, the import ban will take effect, casting uncertainty over its local operations. SK has completed and started mass production at its first plant in Georgia and has decided on plans to expand its second plant.

While SK can temporarily (for 2 to 4 years) produce batteries for some automakers, if the import ban proceeds as scheduled, it will effectively have to shut down its local operations. SK has requested a presidential veto, arguing that closing its local plants would harm jobs and the expansion of the U.S. green industry, including electric vehicles. Amid this, LG has aggressively expressed its intention to expand by telling local senators that it could operate SK’s plants instead.

Although this is contingent on external capital acquiring the plants, if LG, which has competitiveness in the battery business, operates SK’s plants, it is highly likely that there will be no issues with jobs or battery supply. Industry insiders view this as LG applying pressure on SK, which is reluctant to reach an agreement, regardless of LG’s actual willingness to operate the plants.

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