LG Energy Solution to Supply Toyota with Lithium-Ion Batteries for US Electric Vehicles
South Korea’s LG Energy Solution has entered into an agreement to provide Toyota, the world’s largest automaker, with lithium-ion batteries for electric vehicles (EVs) that will be manufactured in the United States. The deal will support Toyota’s expansion of its battery EV lineup, including a new model that will be assembled in Kentucky starting in 2025. LG Energy Solution CEO Youngsoo Kwon stated in an interview that the company now has nine of the top ten automakers as clients and will supply Toyota with 20 gigawatts worth of batteries annually from 2025. Toyota’s Tokyo-listed shares rose by 2.91% following the announcement.
LG Energy Solution’s Collaborations with Other Automakers and Investments in the US
In addition to supplying Toyota, LG Energy Solution also provides batteries to General Motors and recently announced plans to construct a $4.3 billion EV battery plant in partnership with Hyundai in the US. The investment is aimed at taking advantage of tax credits available to buyers of domestically produced vehicles under the Inflation Reduction Act. According to Kwon, LG Energy Solution is investing heavily in the US due to rising labor costs and inflation, as well as the availability of tax credits.
Toyota’s Ambitious Electric Vehicle Goals
Toyota aims to offer 30 battery-electric vehicle models across its Toyota and Lexus brands and produce up to 3.5 million EVs annually by 2030. With this agreement, LG Energy Solution’s supply of lithium-ion batteries will contribute to Toyota’s efforts to achieve these ambitious targets.
Competition Between Chinese and Korean Battery Manufacturers
While LG Energy Solution is currently the world’s third-largest EV battery producer, Chinese companies such as BYD and CATL dominate the sector. CATL, in particular, holds a significant share of the global EV battery market. Kwon views the competition as primarily between Chinese and Korean companies, noting that it is too early to fully assess the capabilities of Chinese battery manufacturers. He emphasizes that successful global operations will be a determining factor in deciding which country’s companies emerge as leaders in the industry.
Hot Take: LG Energy Solution Expands Client Base by Partnering with Toyota
The partnership between LG Energy Solution and Toyota is a significant development that strengthens both companies’ positions in the electric vehicle market. By securing Toyota as a client, LG Energy Solution has expanded its client base to include nine of the top ten automakers. This agreement also supports Toyota’s goal of increasing its production of electric vehicles and diversifying its battery supply chain. With the ongoing competition between Chinese and Korean battery manufacturers, this collaboration highlights LG Energy Solution’s commitment to establishing a strong presence in the global market and solidifies Toyota’s position as a leader in electric vehicle manufacturing.
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