Picture: LG Energy Solutions
Just three months ago, South Korea’s LG Energy Solutions had planned to invest $1.3 billion in an electric vehicle battery plant in Arizona, a facility with the capability of producing 11 gigawatt hours of cylindrical batteries per year.
However, due to deteriorating business conditions, rising costs due to high global inflation and the weaking won against the US Dollar, the company has had to reconsider its plans. Since the plant announcement in March, the estimated cost of the project has risen to over KRW2trn.
A company spokesperson has recently commented saying, “We are thoroughly reassessing the timing, scale and details of the investment, due to a sharp increase in investment costs stemming from the deteriorating business environment.”
They have subsequently said: “Given the unprecedented economic condition and investment in the US, LGES is currently reviewing various investment options, but no decision has been made”
Demand for cylindrical battery cells is expected to grow significantly, especially as we push forward to electrify cars and other vehicles.
The company is investing heavily in the US as this demand becomes very evident throughout the country. LGES already operated an EV battery plant in Michigan, and it further announced a new battery manufacturing joint venture in Canada with Stellantis.
This was in addition to the three planned joint venture plants with General Motors. It had planned to have a production capacity of 200 gigawatt hours in North America by 2025, enough to power 2.5 million high-performance EVs, but this was clearly being reassessed.
Nothing is set in stone about the fate of the production plans in Arizona, however, it would be at a great loss for LGES if the plant is not completed as rising demands continue to soar in the US.