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.