LG Chem signs $2.1 bn cathode material supply deal with Japan’s Toyota

[Courtesy of LG Chem]

South Korea’s LG Chem Ltd. announced Tuesday that it signed a 2.86 trillion won ($2.13 billion) contract to directly supply cathode materials to Japan’s auto giant Toyota Motor Corp., marking the first supply deal between the two entities.

LG Chem said in a regulatory filing that it signed a contract to supply cathode materials to Toyota Motor Engineering & Manufacturing North America Inc. (TEMA), which is responsible for Toyota’s production and technology in North America, until 2030.

The cathode materials supplied by LG Chem will be used in Toyota’s in-house battery production project.

“This contract is signed directly between LG Chem and Toyota’s U.S. subsidiary without going through LG Energy Solution,” said a battery industry insider. “It is expected to cover production of electric vehicles in the range of 600,000 to 700,000 units.”

The anticipated location for the supply is North America, where the batteries produced are likely to be installed in EVs produced by Toyota in the U.S.

As the world’s largest automaker in terms of sales, Toyota has been considered to be slow in terms of electrification.

As part of efforts to make up for this, Toyota plans to invest 8 trillion yen ($53.82 billion) by 2030 to produce 30 types of EVs and batteries, with an aim to sell 3.5 million EVs annually.

The latest contract with LG Chem for cathode materials indicates that Toyota is gearing up for in-house battery production.

LG Chem said it will produce and supply cathode materials that meet the requirements of the U.S. Inflation Reduction Act (IRA) and build a long-term cooperative relationship with Toyota.