LGES to supply Toyota battery modules in US

Peng Chen, DIGITIMES Asia, Taipei 0

LGES will produce NCMA battery modules for Toyota in the US. Credit: LGES

LG Energy Solution has added Toyota Motor as a new customer. The South Korea-based battery maker will build new dedicated production lines in the US to make high-nickel NCMA batteries for Toyota's battery EVs starting in 2025.

According to a joint announcement, LGES and Toyota Motor North America signed a supply agreement for lithium-ion battery modules. LGES will supply Toyota 20GWh of battery modules annually, which consist of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells.

According to South Korea-based Yonhap News, the high-nickel battery adopts a 90% nickel cathode, reducing cobalt and using aluminum to enhance safety. The news outlet also reported that the agreement between the two companies will last 10 years. LGES said it was its largest single supply agreement outside joint venture contracts.

The battery maker plans to invest KRW4 trillion (US$3 billion) in its Michigan plant to set up new production lines exclusively for Toyota. The construction is scheduled to be finished in 2025. According to the announcement, the battery modules produced by LGES will be sent to Toyota's plant in Kentucky to be assembled into battery packs and equipped onto BEVs. Toyota said it will make a new BEV model in the facility in 2025.

The agreement was LGES's first contract with Toyota. The battery maker said it now supplies batteries to all the top five global makers. Youngsoo Kwon, CEO of LGES, said the agreement presents another big opportunity for the company to strengthen production capacity in North America.

LGES has been operating or building eight battery plants across North America, including the joint manufacturing facilities it established with General Motors in the US.

The US Inflation Reduction Act (IRA) has attracted significant investment. Some companies have decided to halt their production plans in Europe and make batteries in the US instead.

According to Benchmark Mineral Intelligence, about 1,398.6GWh of battery production capacity has been planned in North America for 2030. In Europe, the planned capacity is 1,307.5GWh.