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As the Biden administration weighs a decision in a blockbuster
trade secrets dispute directly affecting LG Energy Solution and
future US battery manufacturing capacity, the South Korean company
announced plans to invest $4.5 billion through 2025 in new US
production facilities, a move it said will create 10,000 clean
energy jobs and drive down the cost of electric vehicles (EV) and
energy storage facilities.
The investment by the LG Chem unit would increase its US battery
manufacturing capacity by nearly 70 gigawatthours (GWh) compared
with previously announced plans for its own production facilities
and a joint battery venture with General Motors to supply the
automaker's drive to greatly expand its EV offerings in the next
few years.
LG called the plan to build at least one additional plant and
its discussions with GM to launch a second battery manufacturing
facility under the JV "a full-fledged effort to ensure its position
in the growing US [EV] market." The new investments will add to the
JV's first battery production facility -- an Ohio factory that will
have production capacity of 35 GWh when it comes online in 2022 --
and bring LG's total US battery-making capacity up to 110 GWh, the
company said.
LG announced the plans as the Biden administration approaches an
early April deadline to decide whether it will overturn a decision
by the US International Trade Commission in a multi-billion dollar
trade secrets dispute between LG and rival South Korean battery
maker SK Innovation (SKI).
The ITC on 10 February ruled in favor of LG, which
charged in 2019 that SKI had stolen trade secrets LG had developed
for its battery manufacturing process by hiring away dozens of key
engineers and other employees. SKI was also accused of destroying
evidence to cover up the theft.
As a remedy, the ITC said SKI could not ship components to the
US to manufacture its batteries but instead would have to find
domestic suppliers — conditions that battery market analysts
say would be difficult if not impossible to meet.
The ITC decision threatens to dismantle SKI's plans for a $2.5
billion battery manufacturing plant currently under construction
in Georgia. The plant already has contracts to supply batteries to
planned lines of Volkswagen vehicles and the electric version of
Ford's best-selling F-150 pickup.
The ITC gave SKI a two- to four-year grace period to allow Ford
and Volkswagen to find new battery suppliers, but SKI was clear
that the decision threatened its US expansion plans and could
derail the Georgia factory that promised 2,600 jobs in a state that
just backed Biden for the presidency and in January delivered
control of the Senate to the Democrats.
SK Innovation lobbying
SKI has been actively lobbying the Biden administration to
overturn the ITC decision and save the Georgia plant, while
automakers are urging the two South Korean
rivals to reach a settlement for the good of the US EV and battery
storage industries.
Several news outlets in South Korea reported 11 March that the
two sides have been in settlement negotiations, but SKI said it
would not accept terms that would kill its US business or undermine
its competitiveness.
For its part, LG's announcement of the investments seemed
targeted to win favor with the Biden administration by
underscoring the company's role in achieving Biden's ambitious
climate and clean jobs targets.
"The goals of the US president and automakers will be a
propelling factor in the growth of the country's electric vehicle
and energy storage systems markets," said LG Energy Solution CEO
Jong Hyun Kim. "LG Energy Solution is dedicated to expanding its
battery production capacity and structuring a stable, localized
supply chain that provides everything from [research and
development] to production."
"As the pressure for domestic production for EV components is
heavily increasing in the United States, LG Energy Solution is
eager to expand its production capacity so that it can meet the
needs of numerous global automakers," the company said. "LG Energy
Solution aims to alleviate the industry concerns around battery
supply sufficiency and accelerate the process of expanding its
position in the US."
The heavyweight fight for dominance in US battery manufacturing
comes as the markets for both EVs and energy storage systems are
poised for skyrocketing growth, with rapidly falling costs making
both products increasingly cost competitive.
EV sales, battery deployments soar
Global EV sales shot up 40% in 2020 despite a steep overall
decline in auto sales brought on by the COVID-19 pandemic, and
California has set a goal of phasing out gasoline-powered
light-duty vehicles entirely by 2035.
Meanwhile, the Energy Storage Association reported last week
that battery deployments jumped 179% in 2020 compared with 2019,
with similar growth forecasted for the coming years.
Tapping into that growth, LG's expansion of its battery
manufacturing capacity would increase the number of its direct jobs
from the current 1,400 in Michigan and 1,100 at the Ohio plant to a
total of 6,500 direct jobs, with the new investment creating
another 6,000 jobs through subcontractors, according to the
company.
The company will select two candidates for the location of its
new plant by the middle of 2021. The plant will make both "pouch
cell" batteries for use in EVs and storage systems and "cylindrical
cell" batteries that are finding increased demand from EV makers,
the company added.
Posted 12 March 2021 by Jim Day, Senior Journalist, Energy
