South Korea’s LG Energy Solution signs agreement to supply Toyota, the world’s largest automaker Lithium Ion Battery The electric vehicles will be assembled in the United States, the companies said Wednesday.
The deal will support Toyota’s expanding lineup of battery-electric vehicles, including a new model that will be assembled starting in 2025 at a manufacturing plant in Kentucky, Toyota’s largest manufacturing facility globally.
“One thing I want to change is that we don’t have any business with Toyota, which is number one,” LG Energy Solutions CEO Youngsoo Kwon said in an exclusive interview with CNBC that aired Thursday.
“Nine out of the 10 top automakers are now our customers,” Kwon said, adding that starting in 2025, LG Energy Solution will supply 20 gigawatts worth of batteries to Toyota annually.
Toyota remains the world’s best-selling automaker Sales volume has been close to 10.5 million vehicles for three consecutive years, and sales in 2022 will be close to 10.5 million vehicles.
Toyota’s Tokyo-listed shares rose 2.91% in early trading on Thursday.
LG Energy Solution also supplies other automotive giants such as the U.S. General MotorsKorean Hyundai, Japan Honda. Less than five months ago, LG Energy Solution said it would build a $4.3 billion electric vehicle battery factory in the United States with Hyundai Motor to take advantage of tax credits.
Under the Inflation Reduction Act, buyers of U.S.-made vehicles are eligible for a tax credit of up to $7,500.
“Inflation has caused investment amounts to increase, labor costs have gone up for various reasons. The situation is difficult. The IRA tax credit is large and is offset in the US market. This is what we invest in, build factories and supply in the US Reason,” Quan said.
LG Energy Solution will invest approximately 4 trillion won ($3 billion) “to build a new battery and module production line specifically for Toyota, which is expected to be completed in 2025.”
The Japanese automaker aims to launch 30 pure electric vehicles under its Toyota and Lexus brands by 2030, with annual production reaching 3.5 million pure electric vehicles.
Chinese contest
LG Energy Solutions is currently The third largest in the world According to data from South Korean energy market research company SNE Research, electric vehicle battery manufacturers follow Chinese electric vehicle manufacturer BYD.
Even as the adoption of electric vehicles continues to grow globally, Chinese companies still dominate the industry. China’s Ningde era ranks firstAccording to data from SNE Research, from January to July this year, it accounted for 36.6% of the global electric vehicle battery market.
“This is essentially a competition between Chinese and Korean companies, although we also have Japan’s Panasonic. I think it is too early to fully assess the capabilities of Chinese battery manufacturers,” Quan said.
“The majority of CATL’s manufacturing takes place in China. It’s very easy to keep production within China. It’s a global business, so there are global operations involved.”
“It is easy for us to stay in South Korea. But we face huge challenges in both Poland and the United States. I think whether Chinese companies can do global business well will be the factor that determines the success or failure of Chinese and Korean companies,” Kwon said.
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