South Korean battery giant LG Energy Solution Ltd. has confirmed its plans to move forward with building a battery complex in Arizona and will be significantly increasing its investment in the project.
LGES, one of the largest battery makers in the world, said Friday that now it plans to invest $5.5 billion to construct two manufacturing plants in Queen Creek, a town located just south of the Phoenix-Mesa Gateway Airport.
The company said it will build a $3.2 billion cylindrical battery manufacturing facility for electric vehicles with a capacity of 27 gigawatt hours and a $2.3 billion lithium-iron phosphate pouch-type battery plant for energy storage systems with a capacity of 16 gigawatt hours.
This is nearly four times the original investment of $1.4 billion for a battery plant that LG announced last year for a 1 million-square-foot battery factory, although town documents have said the company’s investment was expected to total $2.8 billion and bring 2,800 jobs.
Both facilities are expected to break ground in 2023 and create “thousands of jobs,” according to a statement from the town of Queen Creek. The new plants will be built across hundreds of acres purchased by LGES in a state land auction last year at Ironwood and Pecos Roads.
LGES said in a statement that its decision to increase its investment in cylindrical battery production in North America is to help meet rising demand from electric vehicle manufacturers for “locally manufactured high-quality, high-performance batteries in an effort to satisfy the Inflation Reduction Act’s EV tax credits.”
The Inflation Reduction Act became effective in August 2022 and includes incentives for the electric vehicle industry in the U.S. in an attempt to compete with China for battery manufacturing, according to media reports. A number of other companies have since made plans to build battery manufacturing plants across the country, including Ford’s new $3.5 billion plant in Michigan.
LGES plant to begin operations in 2025
The new cylindrical battery facility is expected to start mass production of 2,170 cells in 2025 mostly for electric vehicle manufacturers in North America. LGES claims it’s the first U.S. cylindrical battery plant that’s solely invested by a Korean battery maker.
“Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed,” said Youngsoo Kwon, CEO of LGES in a prepared statement. “We believe it’s the right move at the right time in order to empower clean energy transition in the U.S.”
The new battery complex will also use a “smart factory system” to increase yield and improve manufacturing processes to help meet demand for batteries in the region.
