LG Energy Solutions is poised to make further inroads into the burgeoning North American electric vehicle (EV) market, with confirmation of a collaboration with Japanese automotive giant Toyota expected soon. The company has already established a joint venture, LH Battery, with Honda, another Japanese automaker.
Sources within the industry suggest that the South Korean battery manufacturer is on the cusp of agreeing on a partnership plan with Toyota, focusing primarily on EV battery supply in the United States. The proposed joint venture is anticipated to have a battery production capacity of 20 gigawatt-hours (GWh) and could see investments of approximately KRW 3tn ($2.6bn). Both companies are understood to be contributing equally to the investment.
For LG Energy Solutions, the significance of the collaboration lies in partnering with Toyota, a company expected to vie for the top position in the global finished vehicle industry alongside Volkswagen and Honda. Although Toyota has an existing battery joint venture with Panasonic called Prime Planet Energy & Solutions (Prime Planet Energy), the partnership is believed to be focused solely on the Japanese domestic market.
The collaboration with LG Energy Solutions will explore various battery platforms, including the pouch-type battery, previously used by Honda. In contrast, Toyota has primarily utilized prismatic and cylindrical batteries, with Prime Planet Energy manufacturing prismatic batteries. Toyota will integrate the batteries produced by Prime Planet Energy in Japan and LG Energy Solutions in North America into its finished vehicles.
Toyota has recently shifted its strategy away from a focus on hybrid and hydrogen vehicles, in response to the rapid acceleration of the transition to electric vehicles. To meet its ambitious target of launching 10 new EV models by 2026 and selling 1.5 million EVs globally each year, the company requires a separate battery supplier for the North American market.
By 2030, Toyota plans to invest JPY 2tn ($17.6bn) in battery production to secure a capacity of 280 GWh. The automaker aims to achieve a battery production capacity of 40 GWh in Japan and the US by 2026, with LG Energy Solutions taking on 20 GWh and the joint venture with Panasonic handling the remainder.
In March, LG Energy Solutions began construction on a battery joint venture plant with Honda near Jeffersonville, Ohio. The company is also expected to build a 35 GWh joint facility with Hyundai Motors and produce 145 GWh and 45 GWh batteries in partnership with General Motors (GM) and Stellantis, respectively. In North America alone, LG Energy Solutions’ annual battery production through joint ventures is projected to reach 285 GWh.