Company DigestCompaniesLast updated: 4 April 2024

LG Energy Solution Begins Construction of US$5.5 Billion Battery Plant in Arizona

LG Energy Solution Ltd. (LGES), South Korea's leading battery maker, has begun construction of its US$5.5 billion battery plant in Arizona, with operations scheduled to start in 2026. The complex will produce 46-Series cylindrical batteries for electric vehicles (EVs) and lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS). Once completed, its annual output capacity is expected to reach 36 gigawatt-hours (GWh) of cylindrical batteries and 17 GWh of LFP ESS batteries.

Cylindrical battery cells on a production tray

Construction begins on the Arizona complex

SEOUL, April 4, 2024 — LG Energy Solution Ltd. (LGES) said it has started the construction of its US$5.5 billion battery plant in Arizona, aiming to bring the facility into operation in 2026. The announcement was made in a company statement carried on its corporate newsroom at https://news.lgensol.com/.

The Arizona site is the second stand-alone facility of LG Energy Solution to be built in the United States, and the first manufacturing facility of the company in the country dedicated to cylindrical batteries. The company's first stand-alone battery plant, located in Holland, Michigan, was built a decade ago; its other plants in North America that are in operation or under construction are all joint ventures with major carmakers.

Planned product mix and capacity

The Arizona plant is designed around two battery formats serving two fast-growing markets: electric mobility and stationary energy storage. According to the company's statement, the facility will produce:

46-Series cylindrical batteries for electric vehicles (EVs);
lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS);
at completion, an annual output capacity of 36 GWh of cylindrical batteries and 17 GWh of LFP ESS batteries.

Cylindrical batteries are small and round, which makes it possible to stack them in devices of all sizes. Compared with other battery formats, the cylindrical type can pack more power and is seen as relatively safe. Tesla Inc. uses cylindrical batteries for its models, and other carmakers, such as Stellantis N.V. and BMW, are reportedly considering adopting the format for their future EVs.

By producing LFP ESS batteries in the Arizona complex, LG Energy Solution expects to respond in a timely way to the fast-growing need for locally manufactured batteries driven by U.S. clean energy policies.

"Right here is where we can build quality cylindrical batteries"

"This is the second stand-alone facility (of LGES) to be built in the U.S. And it is also the first manufacturing facility to produce cylindrical batteries in the U.S. Right here is where we can build quality cylindrical batteries, which will be used to power millions of EVs," Brian Oh, head of the mobility & IT battery division at LG Energy Solution, said in the statement.

Ochang plant to start 46-Series mass production first

In South Korea, LG Energy Solution plans the first mass production of 46-Series batteries at its Ochang plant as early as August 2024 for delivery to its customers, which is the earliest schedule among major global battery makers. The Arizona groundbreaking extends this cylindrical-cell programme to the United States.

IRA compliance and the tax credit rationale

LG Energy Solution described its investments in battery facilities in the United States as a "full-fledged" effort to provide Inflation Reduction Act (IRA) compliant batteries to its customers. Under the IRA, EV buyers can receive up to $7,500 in tax credits for vehicles that were assembled in North America and made with minerals mined and processed in the United States or in countries and regions that have free trade agreements with Washington. Local production of both cylindrical EV cells and LFP ESS batteries in Arizona positions the company's customers to meet these requirements.

North American and global footprint

In North America, LG Energy Solution currently operates three battery cell plants: the first and second plants under its joint venture with GM, and the stand-alone plant in Holland, Michigan. Additional plants under joint ventures with GM, Hyundai Motor Group, Honda Motor Co. and Stellantis N.V. are being constructed in the following locations:

Michigan — plant under the joint venture with GM;
Georgia — plant under the joint venture with Hyundai Motor Group;
Ohio — plant under the joint venture with Honda Motor Co.;
Ontario, Canada — plant under the joint venture with Stellantis N.V.

In other regions, the company has plants in South Korea, Poland and China, with a plant in Indonesia set to start production in the first half of 2024. The Arizona groundbreaking adds a wholly owned cylindrical- and LFP-cell site to this network.