LG Chem, parent company of electric vehicle (EV) battery maker LG Energy Solution, said Tuesday it will spend $3.2 billion to build a cathode plant in Tennessee.
The goal of the Clarksville plant is to have an annual output of 120,000 tons of cathode by 2027, arguably the single most important material used in EV battery production that determines performance and cost.
LG Chem said the new plant will be the largest of its kind in the US, covering 420 acres. Construction will start early next year and mass production is scheduled for 2025.
Tennessee was the best choice because of its proximity to key customers, the company said. While LG Chem hasn’t officially said so, it’s likely building the plant for maintenance its subsidiary LG Energy Solution.
In Tennessee, Ultium Cells, the battery joint venture between LG Energy Solution and General Motors, is building its electric battery plant in Spring Hill. The company is also building an electric battery manufacturing plant in Lordstown, Ohio.
LG Energy Solution also announced in August that it will enter into a joint venture with Honda to build an electric battery factory in the US. The pair plans to spend $4.4 billion on the project.
The pandemic has increased concerns about potential supply chain disruption, while prices of raw materials such as nickel used in EV batteries have risen in recent years. The US has also announced several policies to build its own local supply chain for products such as chips and batteries. Compatriot SK Innovation, manufacturer of electric cars, is also building a battery factory in Tennessee with Ford. It also plans to build its own factory in Georgia.
The Tennessee facility will enable LG Chem to proactively respond to the changing dynamics of the global battery materials market and with legislation such as the Inflation Reduction Act, the South Korean chemical giant said. The plant will produce advanced NCMA cathode materials, the company said. NCMA means that the cathode consists of nickel, cobalt and manganese, as well as aluminum.
Cathode makers like LG Chem are trying to increase the amount of nickel used to increase the energy density of EV batteries. LG Energy Solution is the second largest manufacturer of electric batteries in the world after China’s CATL supplies batteries to the American car manufacturer Tesla and General Motors and other auto giants.
In May, LG Energy Solution also announced it will spend $4.1 billion with automaker Stellantis to build a battery factory in Ontario, Canada.