Following the news that South Korea’s battery manufacturer LG Chem has earmarked US$5.2bn over the next four years to expand its battery materials business;

Bakar Sadik Agwan, Senior Automotive Consulting Analyst at GlobalData, a leading data and analytics company, offers his view:

“The announced investments by LG Chem are focused on the production expansion of key battery materials including anode material, cathode binders, separation membrane and other essential battery components for the electric vehicles (EVs). These investments will help LG to secure a superior market share in the high-growth EV battery market. LG’s Energy Solution subsidiary is already one of the largest global battery manufacturers.

“The company reports over 30 ESG-based business portfolio projects that are under review and which includes M&As, joint ventures (JV), strategic investments, etc. It plans to commence a new anode production plant in South Korea by end of 2021 and aim to increase production capacity seven-folds between 2020 and 2026. The company is working on JVs and M&As with mining, smelting, refining technology and other companies to ensure a stable supply of essential battery raw materials. Consequently, LG with stable and vertically integrated supply chain will be better positioned than competitors to cater to the growing EV battery demand globally.

“Automakers with aggressive targets for transition ‘away’ from internal combustion engines are committing to multi-billion-dollar deals to supply cells to their upcoming EVs. LG Energy Solution has secured supply contracts with a number of large EV manufacturers which include Volkswagen, Hyundai, Tesla and General Motors. General Motors has developed its new Ultium batteries in cooperation with LG.

“The company’s decision to invest heavily in its battery production business will reassure the auto customers, who value supply chain stability and predictable sourcing patterns, especially with regards to the recent semiconductor shortages they had faced amidst these continuing tough times.”