LG Energy Solution Reconsiders Construction of $1.7 Billion Factory in Arizona, USA

Rising Raw Material Costs and Inflation Increase Investment Costs
Concerns Over Decreased Battery Demand

Overview of LG Energy Solution's U.S. factory in Michigan

LG Energy Solution has decided to fully reconsider its investment plan for the battery-only factory it was set to build in Arizona, USA. This appears to reflect concerns that battery demand may also decrease due to recent rises in raw material prices, inflation, and the resulting fears of an economic recession.

A representative from LG Energy Solution stated on the 29th, "Due to the surge in investment costs caused by the deteriorating economic environment, we are carefully reviewing the timing, scale, and details of the investment." However, LG Energy Solution maintains that "no decisions have been made yet." It is expected to take at least 4 to 6 months until a final decision is reached.

In March, LG Energy Solution announced that it would invest 1.7 trillion KRW to build a new battery factory with an annual production capacity of 11 GWh in Queen Creek, Arizona. This factory was planned as a new investment solely by LG Energy Solution, not a joint venture with an automaker. Especially as demand for cylindrical batteries has been increasing, centered around electric vehicle startups, this factory was intended to be a cornerstone for targeting the cylindrical battery market.

LG Energy Solution plans to proceed with the investment and construction of joint venture factories as scheduled, including the Tennessee joint venture Plant 2 (35 GWh) and the Michigan joint venture Plant 3 (50 GWh), which are currently under construction.

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