LG Energy Solution and Toyota Sign Long-term Battery Supply Agreement to Power Electric Vehicles in the U.S.
5 October 2023
LG Energy Solution and Toyota Motor North America, Inc. (Toyota) have officially entered into a supply agreement for lithium-ion battery modules that will be used in Toyota's battery electric vehicles (BEVs) manufactured in the United States.
The contract stipulates that LG Energy Solution will provide automotive battery modules with an annual production capacity of 20GWh, commencing in 2025. These battery modules will be composed of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells and will be manufactured at LG Energy Solution's facility in Michigan.
These battery solutions will support Toyota's growing portfolio of BEVs as part of its multi-pathway product strategy, which includes a new BEV model scheduled for assembly at the Toyota Motor Manufacturing Kentucky plant in 2025. Additionally, these batteries will contribute to Toyota's broader vehicle electrification efforts, as the company aims to offer 30 BEV models globally under the Toyota and Lexus brand names and produce up to 3.5 million BEVs annually by 2030.
Tetsuo "Ted" Ogawa, President and CEO of Toyota Motor North America, emphasized Toyota's commitment to reducing carbon emissions rapidly. He noted that having a secure and substantial supply of lithium-ion batteries is vital to achieving the company's manufacturing and carbon reduction objectives. Ogawa expressed excitement about the partnership with LG Energy Solution and their ability to provide high-performance and quality products.
In order to fulfill the supply agreement, LG Energy Solution will invest KRW 4 trillion (approximately USD 3 billion) into its Michigan facility to establish new production lines exclusively for Toyota. These lines will produce battery cells and modules, with the project expected to be completed by 2025. Initially, the battery modules will be transported to Toyota Motor Manufacturing Kentucky, where they will be assembled into battery packs and integrated into BEVs.
This partnership leverages LG Energy Solution's extensive experience in manufacturing high-quality battery cells and modules at scale and Toyota's advanced battery pack technologies to create innovative power solutions that optimize battery system performance and enhance the BEV customer experience. LG Energy Solution will continue to prioritize battery safety, including thermal management for its high-nickel NCMA batteries.
Youngsoo Kwon, CEO of LG Energy Solution, expressed excitement about having Toyota as a new customer, emphasizing the company's three decades of experience in lithium-ion batteries. He sees this agreement as an opportunity to support Toyota's expansion into battery electric vehicles and enhance electrification efforts in North America.
This significant agreement marks LG Energy Solution's largest single supply agreement secured outside of joint venture agreements. The company currently supplies batteries to all of the top five global automakers and is actively expanding its production network and supply chain in North America, with eight battery manufacturing facilities either operational or under construction in the region.