LG Energy Solution recently announced a $5.5 billion investment in a battery manufacturing complex in Arizona. This is by far the largest single investment in North America for a standalone battery facility.
LG chose Queen Creek, Arizona, for the future battery facility, but it will not only produce EV batteries. The company is dividing its investment between electric car batteries, which will be manufactured beginning in 2025, and energy storage systems, which will be produced beginning next year.
The dedicated EV battery factory will produce the 2170 cylindrical cells on which many electric car manufacturers rely. The company will invest $3.2 billion towards this battery plant which is expected to have an annual manufacturing capacity of 27 GWh.
LG stated that the Inflation Reduction Act, which became law in August and included federal incentives for the sale and production of electric vehicles and batteries in the United States, influenced its decision. The company had been planning its Arizona facility for some time, but the initial investment was to be around $1.3 billion; the more ambitious $5.5 billion plans were clearly influenced by the US Inflation Reduction Act.
“We believe it’s the right move at the right time in order to empower clean energy transition in the U.S.,” Youngsoo Kwon, the company’s chief executive, said in a statement.
In addition, the company is investing $2.3 billion in a dedicated energy storage manufacturing site. This factory will manufacture LFP batteries for use in either domestic or commercial electricity storage solutions. This facility is the world’s first to be solely dedicated to the production of ESS batteries.
Apart from GM and Tesla, Stellantis, Ford, VW, Audi, Volvo, Mercedes-Benz, Jaguar, and Porsche rely on LG batteries for their electric cars, and having the batteries made in the US will mean at least partial EV tax credits for some of them and full EV tax credit for the others.