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Toyota Signs Massive Deal With LG for Battery Supply

Toyota has just signed a massive battery supply deal with LG in the United States. LG will invest $3 billion in its Michigan plant in order to be able to supply Toyota with batteries for the carmaker’s electric cars.
The Toyota bZ4X electric sub-compact crossover 13 photos
Photo: Toyota
The Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverThe Toyota bZ4X electric sub-compact crossoverLG battery cell
LG Energy Solution will supply the car giant with an annual capacity of 20 GWh starting from 2025. The move was spurred by the US Inflation Reduction Act, which aims to curb inflation by possibly reducing the federal government budget deficit. The IRA proposes incentives to boost domestic production of EVs, batteries, and raw materials.

The batteries provided by LG will be nickel, cobalt, manganese, and alluvium puck-type cells. All of them will roll off the assembly line of the LG plant in Holland, Michigan.

The battery packs will equip the electric Toyotas that are to be assembled in the United States. One of them will be an electric car set to be manufactured at the Toyota site in Kentucky. The model will enter production in 2025. The Japanese target a lineup that will include 30 Toyota- and Lexus-branded electric vehicles by 2030.

LG Energy Solution will invest approximately $3 billion in the Michigan plant, planning to establish new production lines for the battery cells and modules. These will be transported to the Toyota plant in Kentucky. Toyota will assemble them into battery packs and fit them to the future electric cars.

The deal between Toyota and LG is the largest single supply agreement LG Energy Solution has ever signed. LG also has joint ventures with Honda and GM in the United States. For the Ultium battery joint venture, LG and General Motors are building a separate plant, with a $2.1 billion investment, in Lansing, Michigan. The batteries manufactured there will equip the GM electric cars.

LGES will also supply batteries to five automakers, including Stellantis, Honda, and Hyundai from its North American plants.

According to Reuters, there are at least 37 plants operating or planning to operate in the United States and Canada. Together, they provide 1.3 terawatt-hours of the annual production capacity, which is enough to power more than 10 million electric cars per year. Meanwhile, in China, production represents 6.1 terawatt-hours of the annual production capacity, according to Benchmark Mineral Intelligence.

In 2025, Toyota will open a new battery plant in California, in partnership with Panasonic, through their Prime Plant Energy & Solutions joint venture, following a $3.8 billion investment.

Toyota is planning to build up to 3.5 million electric cars per year by 2030 and targets a lineup that will include 30 EVs. Yet, the Japanese were late at the EV party. Their first electric car was the bZ4X. Based on the e-TNGA architecture, developed by Toyota with Subaru, the compact crossover entered production in April 2022.
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