LG Chem Signs Deal with General Motors to Supply Batteries for Plug-in Electric Car

Strategic Insights -

LG Chem, a leading chemical producer in South Korea, has signed a deal with General Motors to supply lithium-ion polymer batteries for GM's plug-in electric car, the Chevrolet Volt. Under the agreement, LG Chem will supply batteries for the Volt from November 1, 2010, until the end of 2015. The company will invest approximately 1 trillion won (US$700 million) in battery production by 2013. The deal comes as the global market for hybrid electric vehicles (HEVs) and electric vehicles is expected to grow rapidly, with an average annual growth rate of 47% and a projected market value of $2.3 billion by 2012.

Key Takeaways:

  • LG Chem will supply lithium-ion polymer batteries for General Motors' Chevrolet Volt from November 1, 2010, until the end of 2015.
  • LG Chem will invest approximately 1 trillion won (US$700 million) in battery production by 2013.
  • The company will also provide batteries to Hyundai Motor Co. and Kia Motors Corp. for their hybrid electric vehicles (HEVs), which are set to begin production in the second half of 2010.
  • South Korean companies LG Chem and Samsung SDI have been developing lithium-ion batteries for HEVs, which have a larger output than nickel hydrogen batteries.
  • LG Chem produced a prototype of the lithium-ion polymer battery in June 2009 and plans to complete expansion of its battery production plant in Ochang by August 2010.
  • Samsung SDI, the world's third-largest producer of rechargeable batteries, has signed a deal with Bosch Corp. to form a joint venture, SB LiMotive, to develop batteries for HEVs.
  • SB LiMotive is scheduled to start commercial production of HEV batteries in 2010.

Statistics:

  • The global HEV and electric vehicle market is expected to grow at an average annual rate of 47% and reach a market value of $2.3 billion by 2012.
  • The market is projected to grow from $510 million in 2008 to $2.3 billion in 2012.

Sources:

  • LG Chem (KSE: 051910)
  • General Motors Corp.
  • Yonhap
  • LG Chem's regulatory filing
  • Bloomberg
  • Korea Times

(Referenced in the original text - THE TIMES OF INDIA