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LG Energy Solution & Toyota Ink Major North American EV Battery Deal

Philip Lee profile image
by Philip Lee
LG Energy Solution & Toyota Ink Major North American EV Battery Deal
Source: LG Energy Soluition

Seoul, South Korea / Tokyo, Japan - LG Energy Solution has formalized a significant EV battery supply agreement with Toyota Motor Corp.

The Key Points

  • Contract Details: LG Energy Solution will supply 20 gigawatt hours (GWh) of EV batteries to Toyota annually for ten years. This contract represents the company's most significant single battery order outside joint ventures.
  • Location: The contract is for the North American market. LG Energy Solution will invest $3 billion (or KRW 4 trillion) to expand its plant in Michigan to create production lines dedicated to Toyota EV batteries.
  • Capacity growth: The Michigan plant's production capacity is expected to reach 40GWh by 2025 after the plant's modifications.
  • Battery type: Toyota will receive high nickel NCMA (nickel, cobalt, manganese, aluminum) sealed batteries. The NCMA composition will be approximately 90% nickel.
  • Cooperation: This contract initiates the business relationship between LG Energy Solution and Toyota, marking a noteworthy development in the North American EV market.
  • Customer base: With this agreement, LG Energy Solution's customer portfolio includes the top five global automakers: Toyota, Volkswagen Group, Renault-Nissan Alliance, Hyundai Motor Group, and General Motors Co.
  • Toyota's market position: In 2022, on a consolidated basis, net sales for the period totaled JPY 37.154 trillion ($275.2 billion), establishing its position as the world's leading automaker. Within North America, Toyota is second only to General Motors.

The Big Picture

Toyota's goals: Toyota's strategy calls for introducing 30 EV models and annual sales of 3.5 million EVs worldwide by 2030. A central component of this approach is the Inflation Reduction Act (IRA) in the U.S., which prioritizes locally manufactured batteries for EVs.

Statements: Tetsuo Ogawa, CEO of Toyota Motor North America, emphasized the importance of ensuring a consistent supply of lithium-ion batteries. Similarly, Young-Soo Kwon, Vice Chairman and CEO of LG Energy Solution, recognized the agreement's role in strengthening North American manufacturing.

Expansion plans: By 2025, LG Energy Solution will operate eight battery manufacturing facilities in North America in partnership with GM, Hyundai Motor Group, Honda Motor Co., and Stellantis N.V.

Philip Lee profile image
by Philip Lee

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