LGES signs 20 GWh EV battery deal with Toyota, targets North America

Pouch long cell battery [Courtesy of LG Energy Solution]

South Korean battery maker LG Energy Solution Ltd. is strengthening its presence in the North American electric vehicle (EV) market via its partnership with Japanese automaker Toyota Motor Corp.

The battery maker said on Thursday it signed a long-term supply contract for EV batteries, totaling 20 gigawatt-hours (GWh) annually, with Toyota, the world’s leading automaker.

This is the Korean battery maker’s largest single order contract, excluding deals based on joint ventures (JVs). The batteries to be provided to Toyota will be high-nickel NCMA pouch cells and will be produced at LG Energy Solution’s Michigan factory.

LG Energy Solution plans to invest a total of 4 trillion won ($2.9 billion) in its Michigan factory from the end of 2023 to 2025 to establish exclusive production lines for battery cells and modules for Toyota. The expansion will increase the factory’s production capacity to a total of 40 GWh.

The battery modules produced at the site will primarily be used in Toyot’s new EV models after being assembled at the automaker’s Kentucky factory.

Toyota was the world’s top seller of automobiles last year, with sales totaling 37.1 trillion won. In the North American market, the Japanese automaker is the second largest by sales volume, following General Motors Co., and sold more than 20 percent of its total sales volume in North America in 2022.

Toyota has intensified its efforts in electrification, with plans to launch 30 vehicle models by 2030 and a global EV sales target of 3.5 million units.

With the latest EV battery deal with Toyota, LG Energy Solution now supplies batteries to all the top five global automakers, including Volkswagen AG and Hyundai Motor Co. LG Energy Solution formed a joint venture with Japanese automaker Honda Motor Co. in 2022, investing 5.1 trillion won to build a battery plant in Ohio with an annual production capacity of 40 GWh. Currently, the battery maker operates two standalone factories and is building six joint venture plants in North America.

“Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-pathway 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 will provide the performance and quality our customers expect,” according to Tetsuo Ogawa, president and CEO of Toyota Motor North America Inc.

LG Energy Solution Vice Chairman Kwon Young-soo, also welcomed the deal. “With our 30 years of experience in lithium-ion batteries, we will provide innovative power solutions to support Toyota’s push further into battery electric vehicles,” he said, reassuring the audience about the company’s efforts to enhance its North American network and innovative competitiveness.

LG Energy Solution holds around 29,000 battery patents, the largest number held by any company. With an annual global production capacity of 200 GWh, the battery maker’s cumulative order backlog amounted to 440 trillion won as of the end of June 2023.