LG Energy Solution to supply Toyota with batteries, invest $3 billion in Michigan plant

The battery maker said Thursday the deal with the world's largest automaker is to supply 20 gigawatt-hours of NCMA battery modules per year, which is enough to manufacture around 200,000 high-performance electric vehicles.

LG Energy Solution inked a battery deal with Toyota Motor, which will make the Korean company invest 4 trillion won ($3 billion) to build a dedicated production line in its Michigan plant.

The battery maker said Thursday the deal with the world's largest automaker is to supply 20 gigawatt-hours of NCMA — nickel, cobalt, manganese and aluminum-based — battery modules per year, which is enough to manufacture around 200,000 high-performance electric vehicles.

The supply will start in 2025 and last for 10 years.

LG Energy Solution's NCMA batteries contain 90 percent nickel. Aluminum content in the batteries increases their capacity, durability and resistance. They also support quick charging.

The size of the deal has not been disclosed.

LG Energy Solution will invest an additional $3 billion in its Holland, Michigan battery factory to build a dedicated production line for the deal by the end of 2025.

LG Energy Solution's pouch-type batteries [LG ENERGY SOLUTION]

The battery maker's modules will be transferred to Toyota's plant in Georgetown, Kentucky, to be assembled into battery packs for the automaker's new electric vehicles in the North American region.

The deal is LG Energy Solution's largest single supply agreement secured outside joint venture agreements.

"We're excited to have Toyota, the best-selling global automaker, as our new customer," Kwon Young-soo, LG Energy Solution CEO, said. "The agreement also presents another big opportunity for us to strengthen our production capacity in North America, thereby bringing more real-life, large-scale progress toward electrification in the region."

With the latest Toyota deal, LG Energy Solution now has all the top five global automakers as clients, including Volkswagen, Hyundai Motor, Renault Nissan Alliance and General Motors.

As the world's largest automaker in terms of sales, Toyota generated 20 percent of its sales from the North American region last year. Toyota has said it plans to build up to 3.5 million electric vehicles annually by 2030 and aims to offer 30 EV models globally, including in its Lexus brand. LG Energy Solution has eight battery manufacturing facilities operating or under construction in North America. The company's annual production capacity will be around 300 gigawatt-hours by 2026, enough to make around 4.1 million EVs.

LG Energy Solution's order backlog stood at 440 trillion won at the end of June.

LG Energy Solution is the world's No. 2 battery maker as of the first half after CATL, with 16.5 percent of the market share.

BY SARAH CHEA [chea.sarah@joongang.co.kr]