South Korea’s LG Energy Solution Ltd. has signed a large-scale battery module deal with Michigan-based Freudenberg e-Power Systems (FEPS) to target a fast-growing electric commercial vehicle market.

Under the deal, LG Energy Solution will supply a total of 19-gigawatt-hour battery modules to FEPS starting next year, which is enough to produce more than 50,000 high-performance electric commercial vehicles such as buses and trucks. The deal is estimated to be worth about $2.44 billion in terms of sales though both did not specify the exact amount.

“Our partnership with FEPS will give us the opportunity to take the lead in the commercial vehicle battery market, which has the potential for exponential growth,” Kim Dong-myung, president of advanced automotive battery division at LG Energy Solution, said in a statement. “Together with Freudenberg, we will endeavor to create unparalleled customer value through differentiated capabilities accumulated across the entire battery-related field, such as battery cells, modules, packs and battery management system.”

FEPS, a subsidiary of Germany’s Freudenberg Group, was launched in 2018 through the acquisition of Xalt Energy, a North American pouch-type battery cell manufacturer. It operates a battery pack and module assembly plant in Midland, Michigan. FEPS will assemble the battery modules from LG Energy Solution into packs and sell them to major commercial vehicle makers in North America.

The commercial EV battery market is relatively smaller than the passenger EV market, but the price of batteries for commercial EVs are more than 50 percent higher than those for passenger EVs.

According to SNE Research, the world’s electric commercial vehicle market is expected to grow at an annual rate of 40 percent, reaching up to 574GWh in 2030. It was about 37GWh last year.

”The partnership with LG Energy Solution enhances our leading battery offering for the bus and truck market,” said Max Kley, CEO of Freudenberg e-Power Systems. “Together we are able to offer our customers an unparalleled range of solutions specifically tailored to the demanding requirements of this market.”

By Lee Yoon-jae and Minu Kim

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