S.Korea's LGES to invest $5.58 billion in new Arizona battery plant

SEUL South Korea's LG Energy Solution Ltd LGES said on Friday it would invest 7.2 trillion won $5.58 billion to build a battery factory in Arizona, reviving a project that was paused last year due to adverse economic conditions.

The world's third-ranked electric vehicle battery maker, which supplies Tesla Inc, Lucid Group Inc and other automakers, in June said it was reassessing what was a 1.7 trillion won investment plan due to unprecedented economic conditions, just three months since the plan's initial unveiling.

Friday's announcement comes after LGES said in January it had been in active discussions with Tesla and electric vehicle startups to supply batteries from the proposed factory.

The new Arizona factory will consist of two manufacturing facilities - one for cylindrical batteries for electric vehicles EV and another for lithium iron phosphate LFP pouch-type batteries for energy storage systems ESS LGES said in a statement.

In order to satisfy the Inflation Reduction Act's IRA EV tax credits, the company said in a statement that the company decided to increase investment in cylindrical EV battery production in North America based on rising demand from EV makers for locally manufactured high-quality, high-performance batteries. Automakers and EV battery producers are racing to set up manufacturing in the United States to take advantage of federal subsidies that could generate up to $45 per kilowatt hour kWh to offset the costs of production.

LGES, which supplies Tesla, General Motors Co and others, has production facilities in South Korea, China, Poland, Canada and Indonesia.

LGES' shares were down 1.6 per cent, compared with a 0.4 per cent decline in the benchmark KOSPI at 0620 GMT.