Toyota LG Battery Deal

author: FutureCar Staff    

Toyota has recently announced a significant battery supply deal with LG in the United States. In order to meet the demand for batteries for Toyota's electric cars, LG will invest $3 billion in its Michigan plant.

Starting from 2025, LG Energy Solution will supply Toyota with an annual capacity of 20 GWh. This decision was influenced by the US Inflation Reduction Act, which aims to reduce the federal government budget deficit and curb inflation. The act proposes incentives to boost domestic production of electric vehicles (EVs), batteries, and raw materials.

The batteries provided by LG will be nickel, cobalt, manganese, and alluvium puck-type cells, all manufactured at the LG plant in Holland, Michigan. These battery packs will be installed in the electric Toyotas that will be assembled in the United States. Toyota plans to manufacture an electric car at its Kentucky site in 2025, and aims to have a lineup of 30 Toyota- and Lexus-branded electric vehicles by 2030.

LG Energy Solution will invest approximately $3 billion in its Michigan plant to establish new production lines for battery cells and modules. These components will then be transported to the Toyota plant in Kentucky, where they will be assembled into battery packs and fitted to the future electric cars.

This deal between Toyota and LG is the largest single supply agreement ever signed by LG Energy Solution. LG also has joint ventures with Honda and GM in the United States, including the Ultium battery joint venture with General Motors, which involves a separate plant in Lansing, Michigan, with a $2.1 billion investment.

LG Energy Solution will also supply batteries to other automakers, including Stellantis, Honda, and Hyundai, from its North American plants. According to Reuters, there are currently 37 plants operating or planning to operate in the United States and Canada, with a combined annual production capacity of 1.3 terawatt-hours, enough to power over 10 million electric cars per year. In comparison, China has an annual production capacity of 6.1 terawatt-hours, according to Benchmark Mineral Intelligence.

In 2025, Toyota plans to open a new battery plant in California in partnership with Panasonic, through their joint venture called Prime Plant Energy & Solutions. This venture involves a $3.8 billion investment and aims to support the production of up to 3.5 million electric cars per year by 2030.

While Toyota has ambitious plans for electric vehicle production, they were relatively late to enter the market. Their first electric car, the bZ4X, which is based on the e-TNGA architecture developed by Toyota and Subaru, entered production in April 2022.

FutureCar Staff