LG Energy Solution (KRX: 373220) and Toyota Motor North America, Inc. (Toyota) recently announced that it has signed an agreement on supply of lithium-ion battery modules that will be used in Toyota battery electric vehicles (BEVs) that will be assembled in the United States.Â
Industry sources added that under the contract LG Energy Solution will supply automotive battery modules with an annual capacity of 20 GWh starting in 2025. The battery modules, composed of high-performance NCMA (nickel cobalt manganese aluminum) pouch-type cells nickel content, will be manufactured at LG Energy Solution’s Michigan facilities.
“At Toyota, our goal is to reduce carbon emissions as much as possible, as quickly as possible,” stated Tetsuo “Ted” Ogawa, president and CEO of Toyota Motor North America. “Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-track approach and growth plans for BEVs in North America is critical to achieving our manufacturing and carbon reduction plans.” “Working with LG Energy Solution, we are excited to offer products that provide the performance and quality our customers expect.”
“We are delighted to have Toyota, the world’s best-selling automaker, as a new customer. With our 30 years of experience in lithium-ion batteries, we will provide innovative energy solutions to support Toyota’s push into battery electric vehicles.” -stated Youngsoo Kwon, CEO of LG Energy Solution. “The agreement also represents another great opportunity to strengthen our production capacity in North America, thus providing more real, large-scale progress towards the electrification of the region.”
The innovative energy solutions will support Toyota’s expanding lineup of BEVs, part of its multi-track product strategy, including a new BEV model that will be assembled at Toyota’s Kentucky engine factory in 2025. They will also help drive Toyota’s vehicle electrification initiatives, which aim to offer 30 BEV models globally across its Toyota and Lexus brands and produce up to 3.5 million BEVs annually by 2030.
To fulfill the supply agreement, LG Energy Solution will invest 4 trillion KRW (approximately $3 billion) in its Michigan facility to create new battery cell and module production lines exclusively for Toyota, scheduled for completion in 2025. Initially, the battery modules will go to Toyota’s engine factory in Kentucky to be assembled into battery packs and fitted into BEVs.
The agreement brings together LG Energy Solution’s proven capabilities in scale manufacturing of top-quality battery cells and modules and Toyota’s advanced technologies in battery packs to create a product with LG Energy Solution’s innovative energy solution that optimizes battery system performance, providing peace of mind and further improving the experience of BEV users.
LG Energy Solution continues to improve battery safety, including with respect to thermal management, in its high-nickel NCMA batteries. This landmark agreement represents the largest single supply agreement reached by LG Energy Solution outside of joint venture agreements. The company currently supplies its batteries to the world’s five largest automobile manufacturers. Building on its market leadership, the company currently has eight battery manufacturing plants in operation or under construction in North America and continues to expand both its production network and supply chain in the region.
