LG Energy Solution Negotiates Battery Supply with Toyota, No.1 Market Share in the US... Sweeping Major Clients

Possible Business Agreement Within This Year
Joint Venture Establishment Likely
9 out of Top 10 Car Companies Expected to Become Clients

[Asia Economy Reporter Choi Seoyoon] LG Energy Solution has entered battery supply negotiations with Toyota, the number one market share holder in the U.S. This means that following General Motors (GM), LG Energy Solution is about to supply batteries to the top two automakers in the U.S. market. Riding on the U.S. government's policy of reshoring manufacturing away from China, the company is consecutively securing large clients.

On the 17th, LG Energy Solution stated, "We are in the early stages of discussions regarding (Toyota battery supply) and are reviewing various cooperation possibilities." Industry insiders are highly anticipating a memorandum of understanding within this year.

Considering LG Energy Solution's own production capacity (CAPA) in the U.S. is around 5GWh, the possibility of establishing a joint venture is gaining traction.

If the agreement is finalized, LG Energy Solution will supply batteries jointly with Panasonic, Toyota's current partner. Earlier, Toyota announced at the end of last month that it would invest $2.5 billion (approximately 3.5 trillion KRW) in North Carolina, U.S., to supply batteries for electric vehicles.

LG Energy Solution counts eight out of the top ten global automakers as clients, including the U.S. Big Three (GM, Ford, Stellantis), Volkswagen, Renault-Nissan, Hyundai-Kia, BMW, and Honda.

Since the enactment of the Inflation Reduction Act (IRA), LG Energy Solution has been the most aggressive among the three domestic battery companies in investing locally in the U.S. Through joint ventures with GM, Honda, and Stellantis, it plans to build a total of five joint factories in the U.S. alone.

Once the announced investments and expansions are completed, LG Energy Solution will have a production capacity exceeding 255GWh in the North American region alone after 2025. The share of North America in total CAPA is planned to increase from 7% this year to 45% by 2025.

With the full-scale electric vehicle era approaching, global automakers excluding Tesla are preparing by establishing joint ventures with battery companies. This is because securing technology and building factories immediately to realize battery internalization involves astronomical costs and time burdens.

Lee Yongwook, a researcher at Hanwha Investment & Securities, said, "Even companies that have been producing batteries for years are struggling to improve yield rates, so it is risky for automakers to develop independently. From the battery companies' perspective, future performance will depend on how quickly they can form partnerships with automakers that have high market shares and profitability or those investing proactively in electric vehicle platforms with growth potential."

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