Toyota's Partnership With LG for Battery Supply

author: FutureCar Staff    

Toyota has recently announced a significant battery supply deal with LG in the United States. As part of the agreement, LG will invest $3 billion in its Michigan plant to enhance its capacity for supplying batteries to Toyota's electric cars.

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

The batteries supplied by LG will consist of nickel, cobalt, manganese, and alluvium puck-type cells. These batteries will be manufactured at LG's plant in Holland, Michigan. The battery packs will be used in the electric Toyotas assembled in the United States, including a model set to be manufactured at the Toyota site in Kentucky, starting production in 2025.

Toyota aims to have a lineup of 30 electric vehicles under the Toyota and Lexus brands by 2030. To support this goal, LG Energy Solution plans to invest approximately $3 billion in the 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.

The agreement between Toyota and LG marks the largest single supply agreement LG Energy Solution has ever signed. LG also has joint ventures with Honda and GM in the United States, including the Ultium battery joint venture with General Motors, which involves the construction of a separate plant in Lansing, Michigan, with a $2.1 billion investment. The batteries produced there will be used in GM electric cars.

In addition to Toyota and GM, LG Energy Solution will supply batteries to five other automakers, including Stellantis, Honda, and Hyundai, from its North American plants. According to Reuters, there are currently 37 operating or planned battery plants 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 annually. In comparison, China's production capacity is 6.1 terawatt-hours per year.

In 2025, Toyota will open a new battery plant in California through its partnership with Panasonic in the Prime Plant Energy & Solutions joint venture. This venture involves a $3.8 billion investment and aims to support Toyota's plan to produce up to 3.5 million electric cars per year by 2030.

Although Toyota was relatively late to the electric car market, their first electric car, the bZ4X, entered production in April 2022. Developed by Toyota and Subaru using the e-TNGA architecture, this compact crossover represents Toyota's initial foray into the EV segment.

FutureCar Staff