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LG Chem to Make Massive Investment in Battery Plants in Nanjing
For Deep Penetration into Chinese Battery Market
LG Chem to Make Massive Investment in Battery Plants in Nanjing
  • By Jung Min-hee
  • January 11, 2019, 10:26
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Kim Jong-hyun (fifth from left), head of LG Chem's battery business division, and Lan Shaomin (fourth from left), mayor of Nanjin, pose for a commemorative photo after signing an investment contract on Jan. 9.

LG Chem will nurture its battery plants in Nanjing as a base for its battery business in China. The company plans to aggressively invest in factories in Nanjing in a bid to expand its presence not only in the Chinese electric car battery market but also in the wireless home appliance battery market.

LG Chem said on Jan. 10 that it would invest an additional 1.2 trillion won to expand its plants in Nanjing. In this connection, the company signed an investment contract with Nanjing City at Xuanwu Hotel in Nanjing on Jan. 9. The company expects that this new investment will help it attain an economy of scale in the battery sector.

LG Chem plans to invest 600 billion won in the electric vehicle battery and small battery factories in the Xinjiang Economic Development Zone in Nanjing by 2020. The plant expansion will help the company meet a sharp increase in demand for pouch-type batteries used in electric vehicles and cylindrical batteries used for light electric vehicles (LEVs) such as electric bicycles and scooters, power tools and wireless cleaners.

Pouch-type batteries are used for electric vehicles produced in the United States and Europe, because they are relatively light and can be made into various shapes to fit vehicle designs. In addition to LG Chem, SK Innovation is the other Korean company producing them. A growing number of Chinese electric car battery makers including Farasis are also producing pouch-type ones.

As for cylindrical batteries, a survey from B3, a market research firm, shows that global demand grew at an average annual rate of 27 percent from 2.3 billion units in 2015 thanks to the diffusion of electric cars and wireless home appliances. It estimates this year’s demand at 6 billion units.

Apart from the battery factories located in the Xinjiang Economic Development Zone in Nanjing, LG Chem plans to build a second electric car battery factory in the Binjang Economic Development Zone in Nanjing by the end of this year with a total investment of 2.1 trillion won. Battery industry watchers forecast that LG Chem's EV battery production will rise to 110 GWh per year by 2020.