LGES to supply Toyota with batteries, invest $3 billion in US plant

By Paul Lienert and Shivansh Tiwary

(Reuters) – Toyota Motor (NYSE:) and LG Energy Solution signed a supply agreement for lithium-ion batteries for use in the Japanese automaker’s U.S.-built electric vehicles starting in 2025, the companies said on Wednesday.

The Toyota-LGES announcement caps a tidal wave of investments in new EV battery plants in North America, spurred by the U.S. Inflation Reduction Act. The IRA and other U.S. legislation provide incentives aimed at boosting domestic production of EVs, batteries and raw materials.

LGES will invest $3 billion in its Holland, Michigan battery facility to supply Toyota’s Kentucky plant from dedicated production lines.

LGES also is a partner with General Motors (NYSE:) in the Ultium battery joint venture, which is building a separate $2.1 billion plant in Lansing, Michigan to supply GM’s electric vehicles.

The agreement with Toyota means LGES now will supply batteries to five top automakers, including Stellantis (NYSE:), Hyundai (OTC:) and Honda (NYSE:), from its eight jointly operated and wholly owned North American plants.

There are at least 37 battery plants operating or planned in the U.S. and Canada, representing 1.3 terawatt-hours of annual production capacity, according to Benchmark Mineral Intelligence. That’s enough to power more than 10 million electric vehicles a year.

The North American projections compare with an estimated 291 existing or planned battery factories in China, representing 6.1 TWh of annual production capacity, according to Benchmark.

Toyota said in August 2022 that it planned to triple its investment to $3.8 billion in a new North Carolina battery plant it will operate with longtime partner Panasonic (OTC:) through the companies’ Prime Planet Energy & Solutions (PPES) joint venture. The plant is slated to open in 2025.

LGES will supply Toyota with 20 gigawatt-hours of high-nickel NCMA pouch-type battery cells and modules annually from the Michigan facility. That’s enough to supply more than 250,000 EVs a year.

The modules will be assembled into battery packs and installed in new EVs by Toyota in Georgetown, Kentucky.

Toyota has said it plans to build up to 3.5 million electric vehicles a year by 2030 and aims to offer 30 EV models globally from its Lexus and Toyota brands.