Shown above are cylindrical batteries made by LG Energy Solution. The firm plans to invest $5.5 billion to build a battery manufacturing complex in the United States. Photo courtesy of LG Energy Solution
SEOUL, March 27 (UPI) -- South Korean battery manufacturer LG Energy Solution announced Friday that it has committed to spending $5.5 billion in the United States toward building a factory complex that would supply batteries for electric vehicles.
The Seoul-based company had already announced plans for a $1.3 billion investment in a new battery factory in Arizona late last year, but with rapid increase in demand, the decision has been made to quadruple the investment amount.
LG Energy Solution said that the complex would consist of two main facilities, one for building cylindrical batteries used in EVs and another for lithium-iron-phosphate pouch-type batteries for energy storage systems.
Of the $5.5 billion investment, $3.2 billion is earmarked for the cylindrical battery plant with mass production set to begin in 2025. The remaining $2.3 billion will go to building the latter factory with the start of its operation aimed for 2026.
The company is scheduled to break ground this year for both facilities.
Energy storage systems are made up of devices that can convert electrical energy from power systems to store the resulting energy. North America is the biggest market for this line of business.
LG Energy Solution claims the new complex would represent the biggest single investment for a stand-alone battery manufacturing facility in the United States.
"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," LG Energy Solution CEO Kwon Young-soo said in a statement.
"We believe it's the right move at the right time, enabling us to take advantage of U.S.'s transition to clean energy," he said.
Industry experts say LG Energy Solution's investment in the U.S. spiked because of the Inflation Reduction Act, which went into effect last year.
"The IRA resulted in U.S. EV makers' demand to shoot up for high quality, locally-manufactured batteries so that the new act's tax credit requirements could be satisfied," Daelim University automotive professor Kim Pil-soo told UPI News Korea.
"Under such a condition, LG Energy Solution and other Korean battery makers are likely to continue increasing their investments in the U.S.," he expected.