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June 29, 2022

LGES reconsiders EV battery plant in Arizona

Estimated cost of the project has risen to over KRW2trn.

By Graeme Roberts

South Korea’s LG Energy Solution (LGES) is reconsidering its plan to invest KRW1.7bn (US$1.3bn) in an electric vehicle (EV) battery plant in Arizona due to deteriorating business conditions, according to local reports citing a company statement.

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Just three months ago, the world’s second largest EV battery manufacturer announced plans to build its second wholly owned battery plant in the US, a facility with the capacity to produce 11 gigawatt hours (GWh) of cylindrical batteries per year.

The company said rising costs due to high global inflation and the weakening won against the US dollar were the main reasons for it to reconsider its plans. Since the plant announcement in March, the estimated cost of the project has risen to over KRW2trn.

A company spokesperson reportedly said: “We are thoroughly reassessing the timing, scale and details of the investment, due to a sharp increase in investment costs stemming from the deteriorating business environment.”

The company subsequently said: “Given the unprecedented economic condition and investment in the US, LGES is currently reviewing various investment options, but no decision has been made.”

The company is investing heavily in the US in anticipation of a rapid rise in demand for EVs in the region.

Demand for cylindrical battery cells is expected to grow particularly strongly.

LGES already operates an EV battery plant in Michigan and, last March, it also announced a new battery manufacturing joint venture in Canada with Stellantis.

This was in addition to three planned joint venture plants with General Motors.

It had planned to have a production capacity of 200 gigawatt hours in North America by 2025, enough to power 2.5 million high-performance EVs, but this was clearly being reassessed.

Free Report
img

What does the future hold for the US electric vehicles market?

The US Electric Vehicles (EV) market has established itself as one to watch. Despite China maintaining the number one spot, the US holds significant standing as one of the major EV markets, with GlobalData’s whitepaper identifying a strong growth trajectory within the forecast period. This report further analyzes the trends, market drivers, and government incentives set to influence and facilitate the market.   This report also looks beyond the US and touches on environmental concerns set to drive the EV market worldwide.   Want to find out more? This report demonstrates GlobalData Explorer’s sector analysis capabilities, showing how you can:  
  • Get historical and forecast market sizing data, with country specific insight for 22+ of the world’s largest industries
  • Track sector dealmaking activity, to view aggregate volumes, specific deals and top investors for all major deal types in M&A, Capital Raising, and Partnerships
  • Analyze news from GlobalData Explorer’s News Database – enable screening and alerts by industry, company, geography and news sentiment for filtered insight
  • Identify and track the key disruptive trends that are keeping the top digital thought leaders talking through social media analytics
  Consult this report now to find out how you and your company can benefit from our Explorer platform.
by GlobalData
Enter your details here to receive your free Report.

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