[Photo provided by LG Chem Ltd.]
In addition to bulking up stand-alone electric vehicle batteries in China, South Korea’s LG Chem Ltd. will build a joint-venture factory with China’s top automotive group Geely for sure protection ahead of the 2021 phase-out in government subsidies expected to level the field for foreign and local players in the world’s largest EV market.
LG Chem announced Thursday that it signed an agreement to set up a 50-50 joint venture with Geely at Geely’s research center in Zhejiang Province on Wednesday (local time). The two companies will invest 103.4 billion won ($87.2 million) each to build a facility capable of producing 10-gigawatt hours (GWh) worth of EV battery packs annually by the end of 2021.
LG Chem shares closed Thursday 3.56 percent higher at 349,000 won.
The batteries will be applied to EVs produced by Geely and its subsidiaries starting 2022. Although the two have not disclosed the exact site of the factory, they plan to break ground around the end of this year.
LG Chem`s EV battery manufacturing plant in Nanjing, China.
LG Chem expects the deal would broaden its presence in the world’s top EV market by providing a stable supply of EV batteries to the Chinese top automaker which plans to switch 90 percent of its products to EVs from 2020. The company would also be able to secure stronger competitiveness once Beijing ends its generous subsidy program for local producers in 2021
LG Chem plans to aggressively seek cooperation with global automakers to boost its EV battery manufacturing as the global EV market is rapidly growing. The company said the joint venture with Geely would reinforce its Chinese business and help it contribute to the development of the EV industry in China.
Early this year, LG vowed $1 billion ramp-up in battery capacity in the existing plant in Nanjing in addition to its $1.9 billion construction it began last year of a second battery plant which would be fully operational in 2023.
By Kang Doo-soon and Choi Mira
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