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Logos of Stellantis and LG Energy Solution (LG Energy Solution)
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LG Energy Solution and global automaker Stellantis said Monday they will form a joint venture in the United States to target the fast-growing North American electric vehicle market.
The partnership will break ground on a new EV battery manufacturing facility in the second quarter next year. Scheduled for commercial operation by the first quarter of 2024, the new factory is to churn out 40 gigawatt-hours of EV batteries annually.
“The name and the location of the joint venture haven’t been decided yet,” an LG Energy Solution official in Seoul said, while declining to give details about the equity stakes that two sides will hold.
The EV batteries produced at the plant will be supplied to Stellantis’ factories in the US, Canada and Mexico to be mounted on the automaker’s next-generation EV lineups. Stellantis is the world’s No. 4 carmaker launched by the merger of Fiat Chrysler Automobiles and French auto giant PSA earlier this year.
The partnership will allow LG Energy Solution to maintain its status as the top EV battery supplier in the US.
The Korean battery producer has originally aimed to secure a total production capacity of at least 140GWh by 2025 in the US. The planned 40GWh plant would increase that figure to 180GWh, which far exceeds its hometown rival SK Innovation’s goal of 150.5GWh in the same period.
For Stellantis, the deal will help it achieve the goal of realizing more than 40 percent of its sales in the US comprised of EVs by 2030.
The partnership between the two companies dates back to 2014 when LG Energy Solution, then LG Chem, was selected by Stellantis, then Fiat Chrysler Automobiles, to supply the lithium-ion battery pack system and controls for the Chrysler Pacifica Hybrid, the industry’s first electrified minivan.
Meanwhile, it remains to be seen whether Stellantis will seek further partnership with Samsung SDI, which is mulling opening its first EV battery cell factory in the US. The LG Energy Solution-Stellantis factory is estimated to cost around 3 trillion won ($2.5 billion), which is just the fragment of 30 billion euros ($34.7 billion) Stellantis aims to inject for electrification by 2025.
The LG-Stellantis deal is the latest in a series of battery producer-automaker tie-ups, as car brands race to secure enough battery supplies in their migration to the EV era.
In December 2019, LG Energy Solution and General Motors formed a US joint venture Ultium Cells, which is currently building two 35GWh battery plants, one in Ohio and the other in Tennessee.
SK Innovation and Ford last month officially kicked off a joint venture BlueOvalSK, which plans to invest $11.4 billion to build three new battery factories in the US — one in Tennessee and two in Kentucky — each with a capacity of 43GWh.
By Kim Byung-wook (kbw@heraldcorp.com)