Commercial

LG Energy Solution to Invest KRW 7.2 Trillion to Build Battery Manufacturing Complex in Arizona, Step Up EV and ESS Battery Production in North America

LGES Completes acquisition of NEC Energy Solutions
  • The largest single investment ever for stand-alone battery manufacturing facility in North America
  • The new manufacturing complex to produce cylindrical batteries for EVs (27GWh) and LFP pouch-type batteries for ESS (16GWh), with total annual production capacity reaching 43GWh
  • Production to start in 2025 and 2026 respectively, addressing customers’ needs for locally manufactured batteries in response to IRA tax credits and surge in market demands
  • The manufacturing complex to ensure cohesive partnerships and further promote collective drive to expedite clean energy transition with major EV and ESS players in North America

SEOUL, March 24, 2023 – LG Energy Solution (LGES; KRX: 373220) today announced it will invest approximately KRW 7.2 trillion (USD 5.5 billion) to construct a battery manufacturing complex in Queen Creek, Arizona. The complex will consist of two manufacturing facilities – one for cylindrical batteries for electric vehicles (EV) and another for lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS).

It marks the largest single investment ever for a stand-alone battery manufacturing facility in North America. It is also about four times the amount the company initially announced last year (KRW 1.7 trillion) to manufacture cylindrical EV batteries in the same location.

Out of the KRW 7.2 trillion, the company plans to invest KRW 4.2 trillion (USD 3.2 billion) in building cylindrical battery manufacturing facility with a capacity of 27GWh, and KRW 3 trillion (USD 2.3 billion) in LFP pouch-type battery facility with the capacity of 16GWh. Both facilities, totaling 43GWh, plan to break ground this year.

With the new battery manufacturing complex in the southwestern state, LGES will boost its production capacity in major product segments, develop more cohesive partnerships with its customers in both EV and ESS sectors, and cut back on the logistics cost by bringing its new manufacturing facilities in close proximity to its customers.

The new cylindrical battery manufacturing facility aims to start mass production of 2170 cells in 2025, mainly for EV makers in North America. It is the first-ever U.S. cylindrical battery manufacturing facility solely invested by a Korean battery manufacturer. The company’s decision to increase investment in cylindrical EV battery production in North America comes from rising demand from EV makers for locally manufactured high-quality, high-performance batteries in an effort to satisfy the Inflation Reduction Act (IRA)’s EV tax credits.

The new manufacturing facility for LFP pouch-type batteries for ESS, which is one of the first ESS-exclusive battery production facilities in the world, aims to start production in 2026. With LG Energy Solution Vertech, Inc.’s fully integrated energy storage solutions, LGES will further expand its presence in the entire ESS value chain.

Situating the new ESS battery facility in North America, the biggest ESS market globally, LGES aims to respond to the fast-growing needs for locally manufactured batteries on the back of the IRA, and further expedite clean energy transition in North America upon the strong government policies supporting the adoption of ESS.

“Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed,” said Youngsoo Kwon, CEO of LG Energy Solution. “We believe it’s the right move at the right time in order to empower clean energy transition in the U.S.”

The company’s new manufacturing facilities will utilize a state-of-the-art smart factory system that carries out all decision making on machine-produced data. By implementing this key measure to enhance product quality, the Arizona facilities will aim to increase yield, improve manufacturing processes, and boost productivity to better respond to the ever-rising battery demands in the region.

Product Investment (USD) Annual Capacity Groundbreaking Start of Production (Target)
Cylindrical Batteries (EV) 3.2 billion 27GWh 2023 2025
LFP Pouch-Type Batteries (ESS) 2.3 billion 16GWh 2023 2026

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