LG Energy Solution likely to supply batteries to Toyota, instead of JV setup

Pouch-cell type battery [Source : LG Energy Solution]

LG Energy Solution Ltd. (LGES) will likely supply electric vehicle (EV) batteries to Toyota Motor Corp., instead of setting up a battery joint venture, according to sources in the battery and automaking industries on Thursday.

The South Korean battery giant is expected to supply pouch-cell type batteries to the Japanese car maker, while the partnership between the two companies is expected to take concrete shape in as early as the first quarter of this year, sources added.

Toyota has mainly used prismatic batteries for its electric cars. But as it is set to get its EV business in gear, it is expected to diversify its battery portfolio.

Toyota, which has been leading the hybrid car market, is a latecomer in an EV boom. It has a large demand to secure battery supply due to the U.S. Inflation Reduction Act (IRA), which subsidizes electric vehicles assembled in the U.S.

It in August unveiled a plan to invest around 7 trillion won ($5.49 billion) in the U.S. and Japan to develop and manufacture electric vehicles. Under the plan, it said it will build its own EV battery factory in the U.S., not pursuing a joint venture with car battery companies. Toyota established a joint venture with Panasonic Holdings Corp. in 2020 named Prime Planet Energy & Solutions (PPES), which is owned 51 percent by Toyota and 49 percent by Panasonic. It produces lithium-ion prismatic batteries in four regions of Japan.

Toyota is the latest among Japanese car majors to join hands with LGES. The latter has agreed to set up a battery manufacturing joint venture with Honda Motor Co. and has started supplying EV batteries to Nissan Motor Co.

LGES manufactures pouch-type batteries in Michigan, U.S.

Shares of LGES were traded at 437,500 won ($344.3), up 0.92 percent from yesterday on Friday morning.