LG Energy Solution and Toyota Motor North America have signed a supply agreement for lithium-ion battery modules to be used in Toyota battery electric vehicles (BEVs) that will be assembled in the USA.
Under the contract, LG will supply automotive battery modules at an annual capacity of 20GWh starting from 2025. The battery modules, consisting of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells, will be manufactured at LG’s facility in Michigan.
The agreement comes at a time when Toyota is expanding its range of BEVs, which will include a new BEV model to be assembled at its plant in Kentucky in 2025. Toyota plans to offer 30 BEV models globally across both Toyota and Lexus brands and produce up to 3,500,000 BEV vehicles annually by 2030.
“At Toyota, our goal is to reduce carbon emissions as much as possible, as fast as possible,” said Tetsuo Ogawa, president and CEO of Toyota Motor North America. “Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-pathway approach and growth plans for BEVs in North America is critical to achieve our manufacturing and carbon reduction plans. Working with LG Energy Solution, we are excited to be able to offer products that will provide the performance and quality our customers expect.”
To fulfill the agreement, LG says it will invest around US$3bn in its Michigan facility to establish new production lines for battery cells and modules exclusively for Toyota, with completion slated for 2025.
The agreement brings together LG Energy Solution’s capabilities in manufacturing battery cells and modules at scale, and Toyota’s technologies in battery packs.
“We’re excited to have Toyota, the best-selling global auto maker, as our new customer,” says Youngsoo Kwon, CEO of LG Energy Solution. “With our 30 years of experience in lithium-ion batteries, we will provide innovative power solutions to support Toyota’s push further into battery electric vehicles. The agreement also presents another big opportunity for us to strengthen our production capacity in North America, thereby bringing more real-life, large-scale progress toward electrification in the region.”
The landmark deal represents LG Energy Solution’s largest single supply agreement secured outside of joint ventures. It now has eight battery manufacturing facilities currently operating or under construction in North America and says it will continue to expand both its production network and supply chain in the region.