LG Energy Solution (KRX: 373220) enters the market for commercial electric vehicles with a battery supply contract.
LG Energy Solution has signed a long-term supply agreement for battery modules for electric vehicles with Freudenberg E-Power Systems (FEPS).
The contract, signed on February 2, will see LG Energy Solution supply 19 GWh of battery modules to FEPS from next year.
This volume is sufficient to power over 50,000 commercial vehicles, including buses and trucks.
FEPS is a subsidiary of the German Freudenberg Group and specializes in manufacturing and selling battery management systems and battery packs for the North American and European markets.
The company operates a gigafactory for pack and module assembly in Midland, Michigan, USA.
Battery modules, which are designed to protect the battery cells from external influences such as heat, shock, and vibration, are an essential component of the battery system of electric vehicles.
FEPS will receive the modules from LG Energy Solution and assemble them into packs before selling them to major commercial vehicle manufacturers in North America.
The market for commercial electric vehicles is expected to increase in the coming years.
According to market research firm SNE Research, the global market will grow from 37 GWh in 2022 to a maximum of 574 GWh in 2030.
The average annual growth rate for this market is over 40%.
LG Energy Solution has stated that it is well-positioned to benefit from this growing market thanks to its extensive experience in the module and packaging business and its standardized module series and BMS capabilities.
The company plans to expand its market leadership through various form factors, such as cylindrical and pouched, as well as its quality control processes.