LG Chem has kept up its relentless pressure to become the world’s top provider of EV batteries with the announcement of a $3 billion investment in a cathode materials plant at Clarksville, Tennessee – which it claims will be the largest in the US. It certainly needed it.
LG Chem is the brand that tends to make the cathode materials, LG Energy Solution the completed battery cells, and that rough division of labor is more or less the same at its home in South Korea. It is building global capacity for a huge landgrab on battery manufacturing – having promised to spend $48 billion chasing this dream back in February.
This cathode materials factory will potentially provide as many as 4 planned US LG Energy Solution plants with cathode materials – certainly the one in in Spring Hill, Tennessee which is in combination with General Motors, and potentially other factories – two more with GM which as yet do not have stated locations and another it has in conjunction with GM in Lordstown, Ohio.
The news came in the form of a signed memorandum of Understanding, which when formalized will trigger $3 billion of spend.
The target annual output of the plant will be 120,000 tons of cathode material by 2027, which will be enough to power 1.2 million high-performance electric vehicles. There is no clear statement about where the raw materials to supply this plant will come from, but presumably it will be from sources which have free trade deals with the US, so that the completed cars will qualify for the Inflation Reduction Act subsidies, in full.
The company says the factory will operate on renewable energy and use smart factory technology. It will cover 420 acres and should be able to power batteries in 1.2 million pure electric vehicles, each with a range of 310 miles per charge. LG has promised to build batteries in the US which should make enough battery by 2027 to power around 1.6 million cars, so most of its US cathode capacity could be supplied by this one factory.
That’s not counting any contribution to Tesla cars and it has just announced a 4680 style battery compatible with the new Tesla battery design, made in South Korea – with no plans yet announced for building this out in the US. It already has planned to make the smaller prior 2170 generation Tesla batteries at a plant it has announced in Arizona, which will also supply companies like Lucid, where 12 GWH to 15 GWh of capacity is planned by 2024. So alongside the likes of Samsung SDI, SK Innovation and Japan’s Panasonic, LG pretty much dominates advanced lithium ion battery manufacture in the US car market, going forwards.
Construction of the new cathode materials plant will begin in Q1 2023 and mass production is set to start in 2H 2025.
It seems odd that the US car market is so delighted at getting out from under the Chinese battery makers, only to bring the bulk of its’ battery capacity to Korean and Japanese manufactures, however much of this is contractually obligated to (and paid for by) the US car makers GM, Ford and Stellantis – so the US is treating it more or less as home grown supply.
It’s not like LG is doing such a great job with its lithium ion battery design, especially earlier mostly NMC designs. LG Electronics has already had to pay General Motors $1.9 billion because it had to recall every Chevvy Bolt it has made since the car was introduced due to battery packs catching on fire. Similarly LG has made batteries which have been the focus of fires in the Battery Energy Storage Systems sector in the US, including the two disasters at Moss Landing. While it is harder to track the blame for 200 two wheeler EV battery fires this year in New York, LG has a significant presence in this market too.
LG switched to providing LFP batteries for all US residential battery storage back in May.
This new cathode facility is however built around a switch to NCMA cathodes containing nickel, cobalt, manganese and aluminum and it is a copy of the factory it has at Cheongju, South Korea which it says has been very successful.
Back in June LG Energy Solution said it would invest $451 million to produce battery cells for Tesla building out 9 GWh worth of production capacity for the new 4680 cylindrical batteries at its 2nd Ochang factory to start in 2023 – again this is a move to an NMCA design. NMCA cathodes are cheaper to make because the amount of Cobalt and Manganese is far lower – but as far as we can see, no less volatile and exothermic reactions can still trigger persistent thermal runaway.
Elsewhere in the car battery market this week General Motors said that it has signed a contract with Vale Canada for long-term supply of battery-grade nickel sulfate from Vale’s planned factory in Bécancour, Québec, Canada – clearly a free-trade partner with North America, ripe for IRA subsidies.
Vale will provide enough Nickel to make 350,000 vehicles using GM’s Ultium battery cathodes which will power the Chevrolet Silverado EV, Blazer EV, Equinox EV, the Cadillac LYRIQ, the GMC Sierra EV, and the GMC Hummer Pickup. This mean it is a relatively small deal at present, compared to how many EVs GM needs to produce to retain its US market share. GM says that it now has sufficient materials contracted to build about 1 million units of EVs each year by 2025 – by that time we calculate that the US market will be absorbing over 5 million EV passenger cars.