LG Energy Solution (LGES) is actively engaging in discussions with three Chinese material suppliers to manufacture affordable electric vehicle (EV) batteries for the European market.
This strategic move comes in response to the European Commission’s implementation of additional tariffs of up to 38% on imported EVs produced in China.
Collaboration with Chinese Suppliers
“We are in talks with Chinese firms who will collaborate with us in developing LFP cathodes and producing them for Europe,” stated Wonjoon Suh, the head of LGES’ advanced automotive battery division.
Suh revealed that the company is evaluating various options, including establishing joint ventures and securing long-term supply agreements.
Potential Production Locations
LGES is considering three potential locations for producing LFP cathodes with Chinese material suppliers for the EU market: Morocco, Finland, and Indonesia.
This decision reflects the company’s commitment to diversifying its supply chain and optimizing production for the European market.
LGES and GM Adjust US Battery Plant Construction
LGES has been actively exploring LFP battery supply deals with multiple automakers across various regions, including the United States, Europe, and Asia.
EV battery cathodes typically utilize either nickel-based or lithium iron phosphate (LFP) materials. While nickel-based cathodes offer greater energy storage and longer EV ranges, they are more expensive.
Conversely, LFP cathodes are less energy-dense but more affordable and environmentally friendly.
In light of the slowing global demand for electric vehicles due to high prices, LGES and General Motors have jointly decided to decelerate the construction of their third battery plant in Michigan.
Suh anticipates that LGES might postpone expansion plans in the United States for up to two years. However, he remains optimistic about the European market, forecasting a rebound in EV demand within 18 months.
Focus on Affordable EVs for European Market
The current market sentiment indicates a strong preference for more affordable electric vehicles. According to Reuters, the demand for budget-friendly EV models is particularly pronounced in Europe compared to the United States.
LGES’ collaboration with Chinese suppliers aims to address this demand by producing cost-effective LFP batteries for the European market.