LG Energy Solutions (KRX: 373220) revealed during an earnings conference call that it is in talks with Tesla to supply batteries for a plant to be built in Arizona, USA.
The company had initially announced plans to invest KRW 1.7 trillion in Queen Creek, Arizona, in March 2022 to build a new cylindrical battery factory but put the plans on hold three months later due to rising costs.
However, following the recent announcement of supply talks with Tesla, construction of the Arizona plant is likely to resume.
LG Energy Solutions supplied Tesla with cylindrical batteries made in Chinese factories and used mainly in Tesla cars for the Chinese market.
However, with the implementation of the U.S. Inflation Reduction Act (IRA), batteries manufactured at the Arizona plant are expected to be shipped to Tesla’s U.S. plants.
This is because battery manufacturers are legally required to use components made in North America or countries with free trade agreements with the United States.
Despite concerns about rising capital and labor costs due to inflation and a possible drop in demand due to the global economic recession, LG Energy Solutions is optimistic about supplying locally produced batteries in the United States.
The company also targets a 25-30% increase in annual sales in 2023 compared to 2022.
It plans to increase global production capacity to 300 GWh by 2023 to produce 4.3 million high-performance pure electric vehicles.
In addition, the company will increase investment to expand global production capacity by more than 50% compared to 2022, or KRW 6.3 trillion.
LG Energy Solutions also reported that annual sales and operating profit in 2022 consolidated were KRW 25,598.6 billion and KRW 1,213.7 billion, respectively, both records for the company.