Battery manufacturing is becoming increasingly important for national security in the US. As we know, batteries play a crucial role in powering various electronic devices, electric vehicles, military equipment, and even medical needs for millions of people. With more battery manufacturing in the US, the country can reduce its dependence on foreign countries for this critical component of its technological infrastructure.
Additionally, batteries are crucial to the development and deployment of various renewable energy technologies such as solar and wind power. With more battery manufacturing capabilities, the US can increase its renewable energy production, which will reduce its reliance on fossil fuels and improve its energy security.
On top of this, the US military is increasingly relying on battery-powered technologies like drones and electric vehicles that require advanced, high-performance batteries. If the US wants to maintain its military dominance, it’s vital that it can produce and supply these batteries domestically to avoid dependence on foreign suppliers, some of whom may not share the same strategic interests.
The Infrastructure Bill, signed into law by President Joe Biden on November 15th, 2021, has provided a major boost to the domestic battery production industry. The bill includes $65 billion in funding for new and existing infrastructure projects, with a focus on improving access to reliable high-speed internet and modernizing transportation networks. Additionally, the bill provides incentives for companies to invest in clean energy technologies such as electric vehicles and renewable energy sources. This has encouraged many companies to invest in domestic battery production, which is essential for powering these new technologies. By providing incentives for companies to invest in domestic battery production, the Infrastructure Bill has helped create jobs and stimulate economic growth while also helping reduce our dependence on foreign sources of energy.
The Inflation Reduction Act was another major milestone in the effort to encourage more domestic battery supply for electric vehicles. The act increased the tax credits available for new electric vehicles. It also eliminated the cap on EV credits for manufacturers who have reached 200,000 EVs sold, making it possible for companies like Tesla and GM buyers to qualify for the full credit again.
More importantly, the Act required vehicles to have batteries sourced from allies instead of “foreign entities of concern” to qualify for the credit. This has encouraged battery manufacturers to move to the United States (where there’s no question about whether it came from a friendly country), and has resulted in auto manufacturers looking to reduce reliance on Chinese battery cells and minerals.
LG Energy Is Answering The Call With A New Arizona Plant
This news about LG Energy Solution investing in a new battery manufacturing complex in Arizona is a significant development in the domestic battery production industry. The investment of KRW 7.2 trillion (USD $5.5 billion) is a substantial amount, and the construction of two manufacturing facilities for cylindrical batteries for electric vehicles (EVs) and lithium-iron-phosphate (LFP) pouch-type batteries for energy storage systems (ESS) shows a commitment to producing not just for electric vehicles but also renewable energy sources.
The investment made by LG Energy Solution in the new battery manufacturing complex in Queen Creek, Arizona, marks a significant milestone in the domestic battery production industry. It is the largest investment made for a standalone battery manufacturing facility in North America to date. Additionally, the amount invested is more than four times the company’s initial announcement last year to manufacture cylindrical EV batteries in the same location.
As part of their KRW 7.2 trillion (USD $5.5 billion) investment in a battery manufacturing complex in Queen Creek, Arizona, LG Energy Solution has announced plans to invest KRW 4.2 trillion (USD $3.2 billion) in the construction of a cylindrical battery manufacturing facility with a capacity of 27 GWh. The remaining KRW 3 trillion (USD $2.3 billion) will be invested in the construction of an LFP pouch-type battery facility with a capacity of 16 GWh. Together, both facilities will have a total capacity of 43 GWh when completed.
“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 LG Energy Solution. “We believe it’s the right move at the right time in order to empower clean energy transition in the U.S.”
LG Energy Solution’s new battery manufacturing complex in Arizona will provide a significant boost to the company’s overall production capacity, as well as improve its relationships with customers in the EV and ESS sectors. LG Energy Solution’s new manufacturing facilities will be located geographically close to its customers, allowing the company to lower its logistics cost and improve its efficiency.
In particular, the cylindrical battery manufacturing facility, which is expected to begin mass production of 2170 cells in 2025, is a first for a Korean battery manufacturer investing solely in the United States. The facility’s production is mainly aimed at EV makers in North America who require high-quality, high-performance batteries to fulfill the requirements of the Inflation Reduction Act’s (IRA) EV tax credits.
The new manufacturing facility for LFP pouch-type batteries for ESS is the world’s first ESS-exclusive battery production plant. With the introduction of LG Energy Solution Vertech, Inc.’s fully integrated energy storage solutions, LG Energy Solution will strengthen its presence across the entire value chain of ESS. This is expected to promote the growth of the ESS market and support the transition to renewable energy sources, in line with global efforts to address climate change.
This investment will create jobs and stimulate economic growth in Arizona, and it is expected that the manufacturing complex will become a significant contributor to the local economy. Furthermore, producing more domestic batteries for EVs is essential to reduce the US’s dependence on imported fuel and batteries. With LG Energy Solution’s investment in this new facility, the US will have a more robust domestic battery production industry, making it more self-reliant and secure in the face of ever-changing global supply chain conditions.
Hopefully this is the first of more to come!
Featured image provided by LG Energy.
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