LG Energy Solution CEO Highlights Milestone in Securing Toyota as a Client
South Korea’s LG Energy Solution has inked an agreement to provide Toyota, the world’s largest automaker, with lithium-ion batteries for electric vehicles (EVs) that will be manufactured in the United States. This collaboration is set to bolster Toyota’s expanding lineup of battery EVs, including a new model scheduled for assembly at its Kentucky plant, the company’s largest global facility, starting in 2025.
LG Energy Solution CEO Youngsoo Kwon expressed his enthusiasm about this landmark deal, stating, “The one thing I wanted to change was the fact that we don’t have any business with the number one player Toyota.” He emphasized that LG Energy Solution now counts nine out of the top 10 automakers as clients. Under the agreement, LG Energy Solution will supply Toyota with a remarkable 20 gigawatts worth of batteries annually starting from 2025.
Toyota’s Leading Position and Ambitious EV Plans
Toyota has maintained its status as the world’s top-selling automaker for three consecutive years, selling nearly 10.5 million vehicles in 2022. The collaboration with LG Energy Solution signifies Toyota’s commitment to expanding its EV offerings. The company aims to introduce 30 battery-electric vehicle models across its Toyota and Lexus brands and achieve an annual production capacity of up to 3.5 million BEVs by 2030.
LG Energy Solution’s Extensive Clientele and Investment Plans
LG Energy Solution is a prominent supplier of EV batteries, serving major automakers such as General Motors, Hyundai, and Honda. In a strategic move less than five months ago, the company announced plans to construct a $4.3 billion EV battery plant in the U.S. in partnership with Hyundai, leveraging tax credits available to U.S. vehicle buyers, which can amount to up to $7,500 under the Inflation Reduction Act.
As part of its collaboration with Toyota, LG Energy Solution will invest approximately 4 trillion Korean won (about $3 billion) to establish new production lines exclusively for Toyota. These lines will be dedicated to manufacturing battery cells and modules, with completion slated for 2025.
Chinese Dominance in the EV Battery Sector
The EV battery industry is witnessing intense competition, particularly from Chinese companies. Currently, LG Energy Solution holds the position of the world’s third-largest EV battery producer after Chinese giant BYD. However, Chinese firms, led by CATL, continue to dominate the sector. CATL secured a 36.6% share of the global EV battery market from January to July this year, according to data from South Korean energy market research firm SNE Research.
Kwon emphasized the competitive landscape, stating, “It’s essentially a competition between Chinese and Korean companies, though we have Japan’s Panasonic too.” He pointed out that the ability of Chinese battery makers to succeed in global operations will be a pivotal factor in determining the outcome of this competition.
Kwon acknowledged the challenges faced by battery manufacturers in expanding their operations globally, emphasizing that “whether Chinese players can do well with their global operations will be the factor that decides who wins between Chinese and Korean companies.”
Advancing Electric Mobility Through Key Partnerships
The agreement between LG Energy Solution and Toyota represents a significant step toward advancing electric mobility and strengthening the presence of both companies in the EV market. As the global automotive industry undergoes a transformative shift toward electrification, collaborations like these are pivotal in achieving sustainable and innovative solutions for the future.