South Korea’s biggest electric vehicle battery maker is betting on fast growth in the US after a package of climate-friendly tax breaks to shut down its biggest Chinese rival as competition in the sector intensifies.
The North American market for EV batteries is set to be the fastest growing in the world this year, said Robert Lee, regional head of LG Energy Solution.
Korean battery makers have been boosted by the passage of the US Inflation Reduction Act, which offers billions of dollars in subsidies to companies that make EVs in the US without relying on Chinese components. The move is part of Washington’s efforts to reduce US economic dependence on China.
LGES is building a factory in Ohio to produce batteries in a joint venture with Japan’s Honda. It has more JVs with General Motors and Stellantis to produce batteries in the US and Canada and has said in “active discussions” to supply Tesla with cylinder batteries from the proposed factory in Arizona.
The IRA has “been a big deal for us” but “it’s not always the reason we make investments in North America”, Lee, head of LGES’s North American operations, told the Financial Times.
LGES expects growth in the North American battery market to be between 65 and 70 percent this year, compared to around 45 percent in Europe and around 25 percent in China.
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The company plans to increase capacity at its North American plant from 15 gigawatt hours in 2022 to 55 gigawatt hours in 2023, as it increases capital spending this year by more than 50 percent.
LGES, which has a market capitalization of $95bn, is one of the two leading battery producers in North America, along with Japan’s Panasonic. Globally, it is the biggest non-Chinese challenger to China’s CATL, which has 37 percent of the market, according to South Korea’s SNE Research.
CATL, which has a minimal presence in the U.S., recently stepped up its challenge to Korean and Japanese rivals when it agreed with Ford this month to license its technology to the U.S. automaker for a $3.5 billion plant in Michigan.
Lee dismissed concerns about the Ford-CATL deal, which analysts say could still be defeated by political opposition in the US and China.
“We are confident in the amount of market share we have,” Lee said. “We’re not limited by a lack of demand, we’re really limited by our ability to produce more.”
He said LGES aims to eventually overtake CATL, which has benefited from the booming Chinese electric vehicle market.
“The market in China expands earlier than other markets in the world, and the Chinese market is not open to all competitors to compete, so we are really not allowed to compete in the market in a very open way,” said Lee.
“Our aspiration is clearly to be number one worldwide in the long term.”
Lee said the higher energy density of LGES’ nickel-rich batteries and its relationship with global automakers will give it a long-term advantage over Chinese competitors.
LGES has a global market share of 13.6 percent, on par with BYD, which recorded last year’s growth of 167.1 percent. These figures show the capacity of batteries installed in electric cars that have been sold.