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LG Chem Partners with GM to Set Up Joint Venture EV Battery Plant in U.S.
A Second EV Battery Plant in U.S.
LG Chem Partners with GM to Set Up Joint Venture EV Battery Plant in U.S.
  • By Michael Herh
  • December 6, 2019, 09:32
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LG Chem researchers examine electric vehicle batteries produced at the company’s plant in Ochang, Korea.

LG Chem of Korea and General Motors (GM) of the United States agreed on Dec. 5 (local time) to set up a joint venture for electric vehicle (EV) batteries in Ohio, the United States.

The two companies have agreed to invest more than US$2 billion to build the plant in Rosetown, Ohio, with each side putting in more than US$1 billion.

Before this deal, GM decided to build a battery plant around its Rosetown assembly plant, which GM had decided to shut down in the process of reorganizing its EV business. The battery plant will absorb some assembly workers.

However, GM did not have the technology to produce EV batteries on its own, so needed to cooperate with battery makers. GM has been negotiating with LG Chem on setting up a joint venture. LG Chem was selected as the sole supplier of batteries for the GM Chevrolet Volt, the world's first mass-produced EV which came out in 2009, and is now the largest battery supplier for GM.

When LG Chem establishes the EV battery plant in cooperation with GM, it will be the company’s second battery production base in the United States following the Michigan plant built in 2012.

The joint venture with GM will allow LG Chem to significantly slash its investment in building large-scale battery production lines. LG Chem previously reviewed Kentucky and Tennessee as candidate regions for the construction of its second plant in the United States. Rosetown is located in Ohio, adjacent to these states, and is 220 kilometers away from Detroit, a major automobile production base.

Recently, the overlapping interests of carmakers seeking stable battery supply and battery makers trying to reduce large-scale investment risk have led to a boom in the establishment of joint ventures for battery production. LG Chem previously announced that it will build a plant in cooperation with Chinese automaker Geely.

LG Chem announced that it will expand its EV battery production capacity, which stood at 35 GWh as of the end of 2018, to 110 GWh in 2020. Market research firm SNE Research expects the EV market to grow to 22 million units in 2025 from 6.1 million units this year.