October 11, 2023 11:31
LG Chem has signed a W2.86 trillion deal for the long-term supply of cathode materials for Toyota's battery factory in the U.S., the Korean company said Tuesday (US$1=W1,350).
The agreement with Toyota Motor Engineering and Manufacturing North America, the world's largest Japanese carmaker's holding company in North America, is effective until 2030. Cathode materials are core materials of batteries and take up 40 percent of the total battery cost.
LG Chem's cathode materials will be supplied to a factory Toyota is building in North Carolina with the aim of providing batteries for electric and hybrid vehicles starting in 2025.
This deal is separate from a W30 trillion deal LG Energy Solution recently signed with Toyota to supply batteries produced at its plant in Michigan.
LG Chem is building the largest cathode materials plant in the U.S. with an investment of W4 trillion in Tennessee. Its goal is to start production in late 2025 and increase annual production capacity to 120,000 tons.
To qualify for tax cuts for electric cars under the U.S.' protectionist Inflation Reduction Act, EV makers must use core battery materials like cathode materials produced in North America, which is why Toyota has chosen LG Chem instead of Japanese suppliers like Nichia.
LG Chem's plant in Tennessee will also have no trouble meeting the tightened decarbonization standards as it will be operated 100 percent with renewable energy such as solar and hydropower.
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