LG Energy Solution expands battery production in Korea and China

Korean battery maker LG Energy Solution is expanding its production of cylindrical cells in Korea and China. That’s according to a securities report LG Energy Solution released for its planned IPO. According to the report, the company will invest the equivalent of $533 million in its Ochang plant in South Korea by 2023 to build a new production line for cylindrical batteries. This will expand the plant’s production capacity to a total of 22 GWh by 2025. In addition, LG Energy Solution will invest the equivalent of 922 million US dollars in the Chinese production facility in Nanjing by 2024. There, the production capacity for cylindrical batteries is expected to exceed 60 GWh in 2025. Batteries and related products often require KCs Ex certification of explosion-proof electrical components for access to the Korean market.

Based on the fact that it normally costs about US$57.8 million to expand battery production capacity by 1 GWh, LG Enery Solution’s investments in Ochang and Nanjing could increase production capacity to about 9 and 17 GWh, respectively. The company’s intention to produce more cylindrical batteries is based on the assumption of higher demand in the coming years. Cylindrical batteries are standardized and look like standard household batteries. As a result, they have the advantage of low production costs and high energy density for their size. Therefore, Tesla and other startups are interested in this type of battery.

LG Energy Solution is considered a supplier of cylindrical batteries for the Chinese Tesla Model 3 and Model Y. With increasing sales of Tesla’s EVs, LG Energy Solution also had to expand its capacity. Some time ago, the battery manufacturer corrected its planned production from 100 to 120 GWh, as an additional 20 GWh of cylindrical batteries were added. In addition to Tesla, other EV startups and manufacturers such as Rivian and Lucid are also using cylindrical batteries. According to a forecast by Bloomberg, EV sales will reach about 25.8 million units in 2030, 15 times the number in 2020. Accordingly, cylindrical batteries are also expected to increase in demand.

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Julian Busch

About the author: Julian Busch is the founder and managing director of MPR International GmbH

Publisher: MPR International GmbH

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