LGES Arizona battery factory will be larger than planned

The battery factory that LG Energy Solution (LGES) is planning in Arizona will be significantly larger than previously communicated. The capacity for round cells is now higher, and an additional production facility for pouch cells with LFP cell chemistry is also to be built on the site.

Last year, LGES announced that it was building a production facility for cylindrical battery cells for electric vehicles in Queen Creek in the US state of Arizona. Annual capacity was said to be 11 GWh. Now the company says it will be more than double – reaching an annual capacity of 27 GWh.

LGES is also planning a second production facility at the site for LFP pouch cells for use in stationary energy storage systems with an annual capacity of 16 GWh. LG Energy Solution will invest about 7.2 trillion won (about $5.5 billion ) in constructing the battery manufacturing complex in Queen Creek, more than four times the amount initially earmarked for the project. It is the “largest single investment ever for a stand-alone battery manufacturing facility in North America,” says LG. Just over $3 billion will be used for round cell production.

The reasons for the change of plans are, on one hand, “the rising demand from EV makers for locally manufactured high-quality, high-performance batteries in an effort to satisfy the Inflation Reduction Act (IRA) ‘s EV tax credits.” On the other hand, the company says demand for batteries for stationary energy storage is also rising.

But the change in plans is causing a delay. Construction was initially to kick off in Q2 of 2022, and the production start was scheduled for the second half of 2024.

LGES now says that construction of both production facilities will begin this year. The round battery plant is scheduled to begin mass production 2170 format cells in 2025, primarily for EV makers in North America. Production of LFP cells is expected to start a year later.

“Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed,” says Youngsoo Kwon, CEO of LG Energy Solution. “We believe it’s the right move at the right time in order to empower clean energy transition in the US.”
lgcorp.com