LG Chem will build a plant to produce batteries for electric vehicles in China. It will be the third Korean company with a factory making batteries in the country following Samsung SDI and SK Innovation, which are both in the process of setting up operations there.
"LG Chem made the move in light of the fact that key buyers of electric car batteries such as GM and Volkswagen have plants there. The factory will likely be built in Nanjing, Guangzhou or Tianjin, and the company will finalize the site by late this year," said an LG staffer.
The firm has a battery plant in Cheongwon, North Chungcheong Province, and two more in Holland, Michigan.
Beijing's policy to support electric cars reportedly played an important role in LG's decision. China will continue to provide subsidies to buyers of EVs instead of ending them late next year as first planned. It recently announced a plan to have 5 million EVs on the road by 2020.
Meanwhile, Samsung SDI will spend W634.1 billion (US$1=W1,025) on building its battery plant in Xian, Shaanxi Province. It plans to start construction late this year and begin operations within next year. The new plant will be built jointly with Chinese parts maker Anqing Ring New Group.
SK Innovation established a joint venture with Beijing Automotive Industries Holding last July to build a plant in China.
An industry insider said that competition will become fiercer after Korea's three battery manufacturers begin operating their factories in China.