LG Chem breaks ground on $1.5 billion battery materials plant in Tennessee

Ground was broken on LG Chem's 2 trillion won ($1.5 billion) battery materials plant in Tennessee, the largest of its kind in the United States.

LG Chem CEO Shin Hak-cheol, fifth from left, Tennessee Gov. Bill Lee, sixth from left, and other officials attend the groundbreaking ceremony of the company's cathode plant in Tennessee on Dec. 19. [LG CHEM]

Ground was broken on LG Chem's 2 trillion won ($1.5 billion) battery materials plant in Tennessee, the largest of its kind in the United States.

The plant in Clarksville, northern Tennessee, will produce 60,000 cathodes per year in 2026. Consisting of nickel, cobalt, manganese and aluminum, cathodes are one of the four key materials in making EV batteries that make up 40 percent of the battery cost.

That is enough to make batteries for 600,000 EVs, LG Chem said.

The investment will then be increased to $3.2 billion by 2027 to raise the capacity to 120,000.

The Tennessee plant will likely help LG Chem's clients, both car battery makers and EV manufacturers, to satisfy the EV tax credits under the U.S. Inflation Reduction Act (IRA).

The IRA requires half of the value of battery components to be assembled in North America to receive a $3,750 credit and 40 percent of the value of critical minerals sourced from the United States, or a free trade partner, for another $3,750.

LG Chem already secured two major cathode supply deals with General Motors and Toyota Motor.

LG Chem last year signed a long-term deal to supply 950,000 tons of cathodes to General Motors plants. In October, it inked a 2.9 trillion won contract with Toyota to supply cathodes to the Japanese carmaker's U.S. plant.

"We are aiming to emerge as the No. 1 cathode supplier in the U.S. market by providing differentiated value to our customers there," LG Chem CEO Shin Hak-cheol said.

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