Toyota Motor and LG Energy Solution have inked a significant supply agreement for lithium-ion batteries, set to power Toyota's U.S.-manufactured electric vehicles starting in 2025. This partnership marks a strategic move to tap into the burgeoning electric vehicle (EV) market, propelled by legislative incentives, most notably the U.S. Inflation Reduction Act (IRA).
Under the terms of the agreement, LG Energy Solution will channel a substantial $3 billion investment into its Holland, Michigan battery facility, dedicated to supplying Toyota's Kentucky plant with cutting-edge battery technology. This investment will fuel dedicated production lines, ensuring the seamless integration of advanced batteries into Toyota's EV lineup.
It's worth noting that LG Energy Solution is no stranger to the EV battery sector, as it also collaborates with General Motors in the Ultium battery joint venture. This venture is set to construct a separate $2.1 billion plant in Lansing, Michigan, geared towards powering GM's expanding electric vehicle portfolio.
This latest pact signifies LGES's ascension as a premier battery supplier, serving five top-tier automakers, including Stellantis, Hyundai, and Honda. They achieve this through a network of eight jointly operated and wholly owned North American plants.
The surge in battery production facilities in North America is nothing short of remarkable, with at least 37 plants either operational or in the pipeline, boasting a staggering annual production capacity of 1.3 terawatt-hours. This formidable capacity could energize over 10 million electric vehicles annually, testament to the region's commitment to sustainable transportation.
In contrast, China, a global EV powerhouse, boasts an estimated 291 existing or planned battery factories, boasting an impressive 6.1 terawatt-hours of annual production capacity.
Toyota, a trailblazer in the automotive industry, has outlined ambitious plans to triple its investment, totaling $3.8 billion, in a forthcoming North Carolina battery plant. This facility, established in collaboration with Panasonic under the Prime Planet Energy & Solutions (PPES) joint venture, is scheduled to commence operations in 2025.
LG Energy Solution is set to provide Toyota with a substantial annual supply of 20 gigawatt-hours of high-nickel NCMA pouch-type battery cells and modules from their Michigan facility. This remarkable output will be sufficient to power over 250,000 electric vehicles each year. Toyota will further streamline the integration process by assembling these modules into battery packs, ready for installation in their new EV models, all taking place at their Georgetown, Kentucky facility.
Toyota's commitment to electrification is evident in its aim to manufacture up to 3.5 million electric vehicles annually by 2030, along with offering a comprehensive lineup of 30 EV models under the Lexus and Toyota brands worldwide.