LG Energy Solution is pushing for the construction of a battery plant in the U.S. state of Arizona again. The plan was announced last year but was put on hold.
“We are discussing with Tesla the supply of cylindrical batteries to be produced by the Arizona plant,” LG Energy Solution said in an earnings conference call on Jan. 27. “We will announce a detailed plan as soon as the plan is finalized.”
The company announced in March 2022 that it would invest 1.7 trillion won to build a new cylindrical battery plant in Queen Creek, Arizona. However, three months later, the Korean battery giant began to completely review the plan.
“Even at the time of announcing the review, LG Energy Solution was not considering scratching off the investment plan,” an industry official familiar with the matter said on Jan. 29. “I understand that the company adjusted the details of its plan, such as the size of the plant and mass production timing, during the review process due to changes in the business environment. It will restart the project sooner or later, I think.” He added, “With the implementation of the Inflation Reduction Act (IRA), demand for cylindrical products has risen further, and orders keep coming from customers, I heard. The size of LG Energy Solution’s investment may expand further.”
Industry insiders believe that Tesla requested LG Energy Solution to supply EV batteries as it needed batteries produced in North America due to the implementation of the IRA. Currently, LG Energy Solution is supplying Tesla with cylindrical batteries produced in factories in China. Tesla is using the cylindrical batteries for EVs sold in the Chinese market.
Meanwhile, LG Energy Solution racked up annual sales of 25,598.6 billion won and operating profit of 1,213.7 billion won in 2022. It aims to boost its annual sales by 30 percent in 2023 and expand investment by more than 50 percent from 2022.