LG kicks off colossal ramp-up of US factories for EV and grid batteries
Construction is underway at the 1.7-million-square-foot expansion of LG Energy Solution’s manufacturing facility in Holland, Michigan. (LG Energy) South Korean manufacturer LG is drastically scaling up its U.S. production of lithium-ion batteries for electric vehicles and the grid. The U.S. clean energy sector is transforming from an import-based industry to one that builds equipment domestically, bolstered by supportive policies in the Bipartisan Infrastructure Law and the Inflation Reduction Act. As Canary Media reported recently, U.S. battery manufacturing is on track to grow tenfold by 2027 . But LG Energy Solution, one of the largest battery makers in the world, has already committed to factory construction that would increase its own U.S. production capacity by a factor of more than 55 by 2027. LG Energy Solution already operates 5 gigawatt-hours’ worth of battery production in Holland, Michigan, which it launched in 2013 to supply the Chevy Volt . But LG will quintuple production at that facility by 2025, while it also builds a new complex capable of making 43 gigawatt-hours’ worth of batteries per year in Queen Creek, Arizona, near Phoenix. Subscribe to receive Canary’s latest news The company will also build battery factories as joint ventures with electric vehicle companies: It’s working on a plant with 30 gigawatt-hours of capacity with Hyundai in Savannah, Georgia; one with 40 gigawatt-hours of capacity with Honda in Ohio; and a total of 140 gigawatt-hours of capacity with GM’s Ultium battery brand across sites in Ohio, Michigan and Tennessee (that Ohio site began initial production in the latter half of 2022). That makes LG an important participant in the Southeast’s emerging Battery Belt , as well as an investor in the traditional heart of the auto industry. “We’d be foolish not to say the IRA incentives are a part of it, but I wouldn’t say that’s the only argument” for the company’s extensive buildout, said Peter Gibson, VP of sales and marketing for LG Energy Solution Vertech, the division which integrates LG batteries into grid power plants. “We were developing these plants well before the IRA was published or the details became available.” While many manufacturers are adding capacity in the U.S., LG stands out for the sheer scale of its pivot to American production. Customers want local batteries LG’s U.S. manufacturing push caters to battery customers who have been starting to ask for domestic products, Gibson said. China controlled 79% of global lithium-ion battery cell production capacity in 2022, according to data from Clean Energy Associates . That lopsided dominance is drawing more scrutiny from both Republicans and Democrats in Washington, D.C. who see it as a major vulnerability. Some battery customers worry about the security implications of a largely China-based supply chain, Gibson said. But perhaps the clearest gain from switching to local production is reducing the cost and uncertainty of shipping logistics. “Covid highlighted how shipping costs and shipping availability can shift tremendously depending on what’s happening on the global stage,” Gibson said. This customer sentiment was already inspiring LG to develop new U.S. factories, and then the Inflation Reduction Act codified the swirling excitement around reshoring manufacturing into specific tax credits for domestic production and for electric vehicles and grid storage plants that use locally sourced batteries.
