Toyota has reached an agreement with LG Energy Solution to supply lithium-ion battery modules for future EVs built in the United States. The Inflation Reduction Act, which proposes incentives to encourage domestic manufacturing of EVs, batteries, and raw materials, motivated the move.

Beginning in 2025, LG Energy Solution will offer Toyota with an annual capacity of 20 GWh. These modules will be made of nickel, cobalt, manganese, and aluminum pouch-type cells manufactured at the company’s Michigan facility.

LG Energy Solution plans to invest $3 billion in the Michigan plant, establishing new production lines for the battery cells and modules. These will be shipped to Toyota’s Kentucky manufacturing facility. The Japanese automaker will combine them into battery packs and install them in future electric vehicles, which will include 30 Toyota- and Lexus-branded vehicles by 2030.

This new deal is the largest single supply agreement LG Energy Solution has ever signed. From its North American operations, the battery behemoth also supplies five manufacturers, including Stellantis, Honda, and Hyundai.

Toyota’s plan is to produce up to 3.5 million electric vehicles per year by 2030, with a lineup that includes the 30 EVs mentioned. The bZ4X, a compact crossover co-developed with Subaru, was their first fully electric vehicle, it went on sale in April 2022.