LG Energy Solution allocating $5.5B for Arizona Battery Manufacturing complex

March 27, 2023
The Queen Creek, Arizona, complex will comprise two facilities, one for cylindrical batteries for electric vehicles (EV) and the other for lithium iron phosphate pouch-type batteries for energy storage systems

In the latest of a series of moves bringing energy storage production capacity into the U.S., South Korea utility-scale and e-mobility battery supplier LG Energy Solution (LGES) has announced plans to invest around KRW7.2 trillion (about $5.54B U.S., at current exchange rates) to build a battery manufacturing complex in Queen Creek, Arizona.

The complex will comprise two facilities, one for cylindrical batteries for electric vehicles (EV) and the other for lithium iron phosphate (LFP) pouch-type batteries for energy storage systems (ESS).

LGES claims this is the largest investment ever made for a stand-alone battery manufacturing facility in North America and is four times the amount initially announced by the company last year.

The investment will be divided into KRW4.2 trillion for the cylindrical battery manufacturing facility with a capacity of 27 GWh, and KRW3 trillion for the LFP pouch-type battery facility with a capacity of 16 GWh. The two facilities, totaling 43 GWh, are scheduled to break ground this year.

Earlier this year, LG and Honda Motor announced a joint venture with plans to build a $4.4 billion L-H Battery Co. joint venture manufacturing plant in Ohio. Others which have detailed new manufacturing for EV and utility-scale battery production within the domestic supply chain include Cirba, Panasonic Energy, Microvast,  FREYR, AESC, Stallantis, Samsung and Factorial Energy.

See our full coverage of Battery Manufacturing announcements in EnergyTech

Read our latest newsletter with stories on the impact of Silicon Valley Bank's collapse to Clean Energy and other big stories of March

For its part, LG Energy Solution says it decided to increase its investment in cylindrical EV battery production in North America in an effort to meet the rising demand from EV makers for locally manufactured high-quality, high-performance batteries and comply with the Inflation Reduction Act’s EV tax credits. The IRA details credits are available only to e-mobility products with a certain percentage made inside the U.S.

LGES notes that the new manufacturing complex will allow it to increase its production capacity in key product segments, develop closer partnerships with customers in both EV and ESS sectors, and reduce logistics costs by bringing its manufacturing facilities closer to its customers.

The new cylindrical battery manufacturing facility is expected to start mass production of 2170 cells in 2025, mainly for EV makers in North America, while the LFP pouch-type battery facility is set to start production in 2026.

LGES plans to utilize a smart factory system for its new manufacturing facilities to enhance product quality, increase yield, improve manufacturing processes and boost productivity.

“Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed,” said Youngsoo Kwon, CEO of LG Energy Solution. “We believe it’s the right move at the right time in order to empower clean energy transition in the U.S.”

LG Energy Solution is a spinoff of global firm LG Chem.

About the Author

EnergyTech Staff

Rod Walton is senior editor for EnergyTech.com. He has spent 14 years covering the energy industry as a newspaper and trade journalist.

Walton formerly was energy writer and business editor at the Tulsa World. Later, he spent six years covering the electricity power sector for Pennwell and Clarion Events. He joined Endeavor and EnergyTech in November 2021.

He can be reached at [email protected]

EnergyTech is focused on the mission critical and large-scale energy users and their sustainability and resiliency goals. These include the commercial and industrial sectors, as well as the military, universities, data centers and microgrids.

Many large-scale energy users such as Fortune 500 companies, and mission-critical users such as military bases, universities, healthcare facilities, public safety and data centers, shifting their energy priorities to reach net-zero carbon goals within the coming decades. These include plans for renewable energy power purchase agreements, but also on-site resiliency projects such as microgrids, combined heat and power, rooftop solar, energy storage, digitalization and building efficiency upgrades.