LG Energy Solution will invest 7.2 trillion won ($5.57 billion) in building battery plants in Arizona, the company announced Friday.
The battery maker will spend 4.2 trillion won to build a 27-gigawatt-hour production facility for cylindrical batteries in Queen Creek, Arizona, and 3 trillion won to build another 16-gigawatt-hour production plant for lithium iron phosphate (LFP) batteries in line with its energy storage system (ESS) project.
The total production capacity of the combined two is 43 gigawatt-hour, the biggest of any plants in North America.
The investment is a whopping jump from its prior 1.7-trillion-won deal initially announced in March. That plan was put on hold in June with the company saying it is “reassessing” the deal.
“We shelved the investment last year due to unfavorable business conditions, including increasing costs driven by rising inflation,” said a spokesperson from LG Energy Solution. “It’s difficult for business conditions to be better within a year, but the newly-passed Inflation Reduction Act led to an increase in demand for electric vehicles in the North American market and drove up the number of companies who want to produce them. We’ve decided to push forward with the plant construction to meet the rising demands.”
The company acquired a 650-acre site in Queen Creek in April for $84.4 million.
The cylindrical battery plant construction will break ground sometime this year and is scheduled to be completed and up and running by 2025. It will produce 2170 cylindrical-type batteries which can be used to produce 350,000 electric vehicles (EV).
The 2170 indicates the size of the battery — 21 millimeters (0.8 inches) in diameter and 70 millimeters in length.
No other Korean battery maker has built an American factory for cylindrical batteries, which are used in Tesla vehicles and a few EV startups.
The company states that the global EV market is on the rise — anticipating that the market will grow to 70.2 trillion won by 2026 from 36.8 trillion won last year.
![LG Energy Solution's 2170 cylindrical-type batteries, top, and pouch-type LFP batteries above [LG ENERGY SOLUTION]](https://koreajoongangdaily.joins.com/data/photo/2023/03/24/67449d6a-bd08-4fba-9031-5f08a526d0ff.jpg)
The ESS plant will produce pouch-type LFP batteries and plans to start construction this year. The goal is to complete construction by 2026.
An ESS improves grid stability by storing excess energy and releasing it when the demand arises, and therefore is considered crucial in increasing energy efficiency for renewable energy plants.
“The construction of the Arizona battery plant will be an opportunity to become a leading figure in the rapidly-growing North American EV market as well as in ESS sector,” said LG Energy Solution’s CEO and LG Group Vice Chairman Kwon Young-soo in a statement. “We’ll provide the very best products to consumers worldwide by strengthening our unrivaled global production capacity and product competitiveness.”
With the completion of the Arizona battery plant, the battery maker will have a total of seven battery plants operating in North America. It has an energy production plant running in Michigan; Three joint venture plants formed with General Motors in Ohio, Tennessee and Michigan; Another joint venture plant with Honda is under construction in Ohio and the other plant with Stellantis is under construction in Ontario. Both will finish construction in 2024.
BY LEE JAE-LIM [lee.jaelim@joongang.co.kr]
