Meaning of LG Energy Solution’s

● Meaning of LG Energy Solution’s self-disclosure and what to pay attention to in the future in the secondary battery

An autonomous disclosure was announced today that LG Energy Solution will acquire Ultium Cells Plant 3. According to a foreign press report on December 3, 2024, GM announced that it has signed a non-binding contract to sell its stake in Ultium Cells Plant 3 under construction in Lansing, Michigan to LG Energy Solution. The self-disclosure was made today.

Ultium Cells Plant 1 began operations in August 2022, while Plant 2 began operations in April 2024. However, on July 22, 2024, it was reported that Plant 3 would temporarily suspend construction in the wake of slowing demand following EV casm.

Meanwhile, according to another report today, its own Michigan Holland plant initially decided to make Toyota-flavored batteries, but decided to mass-produce LFP batteries for ESS from the second half of this year. Accordingly, it announced that it has decided to provide 2.319 trillion won in debt guarantees for investment in ESS production facilities at the Holland plant and 3.6027 trillion won in debt guarantees for the purchase of Ultium Cells plant 3.

According to another report today, Toyota announced that it has signed a $1.5 billion battery order with LG Energy Solutions. Specifically, Toyota will transfer orders allocated to its existing Michigan Holland plant to its Lansing plant. The $1.5 billion is approximately 10 to 15 GWh of battery cells, and since the original CAPA for Plant 3 of Ultimate Cells was around 50 GWh, more supply contracts with Toyota are expected.

In other words, its own Michigan Holland plant will mass-produce LFP batteries for ESS from the second half of the year to respond to rapid demand, and Ultium Cells Plant 3 will take over to produce Toyota-flavored batteries as dedicated lines. In the second half of last year, LG Energy Solution said at IR that it would determine CAPEX in response to local demand in North America, but it has now surfaced.

LG Energy Solution plans to start mass production of the ESS JF2 project in April this year. LG Energy Solution signed a 7.5GWh ESS supply contract with Excelsio Energy Capital, a global private equity fund manager specializing in renewable energy, through its U.S. subsidiary, VerTech, on December 20, 2024. This contract includes producing and supplying ‘JF2 AC LINK’, a container-type product based on ‘JF2’ cell, LG Energy Solution’s high-capacity LFP long cell, in North America starting in 2026. LG Energy Solution has signed three large-scale ESS supply contracts in 2024 alone. Earlier in May, it had 4.8GWh with Hanwha Q Cells and 8GWh with Terrazen, an American renewable energy company. It is expected that a number of new orders will be signed in 2025 regarding JF2 that will be mass-produced in the region.

According to LG Energy Solution’s recent story, most of the projects are in discussion with new electric vehicle OEMs for pouch-type batteries. In particular, there is a lot of discussion about LFP pouch-type batteries. And what is unique is that the keynote of North American OEMs has changed since the Trump administration took office. It is said that the atmosphere of limited use of Chinese batteries such as CATL is now shifting to excluding Chinese batteries altogether.

How will we know when the battery industry is rebounding and when the segment is out of the EV cash? Most definitely, we’ll need to see a recovery in EV sales data, and we’ll need to see battery inventories and a rebound in mineral prices such as lithium. Before that, the first thing we can do is read battery companies’ CAPEX changes.

By the second half of this year and the end of the year, it is expected to hear news of large-scale new project orders from three domestic battery companies. Orders at the end of this year will be a supply contract for new batteries aimed at 27 years or later.

Soon, “Interbattery 2025,” which will be held from March 5, will be the time to throw an important meaning. If you pay attention to this event, which has no expectations after 2023, when interest in batteries exploded, and 2024, when the catharsis was in full swing, you will find many opportunities for investment.

For the first time, BYD will participate in this interbattery event. Personally, I think all three key topics of this interbattery are solid state, LFP, and ESS.

All-solid battery, a technology to survive the competition with China, has recently become a necessity in various industries such as defense, aerospace, and robots. It aims to mass-produce in 2028, and mass-produce will be after 2030, but it must be a key technology that must be successful. It is worth paying attention to solid electrolyte and lithium sulfide companies that are cooperating with Samsung SDI, which has the fastest time to mass-produce among the three domestic batteries.

In order to receive the order on behalf of China, we need to mass-produce LFP. LG Energy Solution’s order in the second half of this year is expected from the LFP pouch. Also, LFP is needed for ESS, which is growing significantly right now. We need to pay attention to companies that can cooperate with LG Energy Solution to supply materials to LFP pouch batteries.