Toyota EV battery deal calls for LG Energy to invest $3B in Michigan

Toyota Motor Corp. and LG Energy Solution on Wednesday said they have signed a supply agreement for lithium ion battery modules for use in the automaker's electric vehicles that will be assembled in the U.S.

LG Energy Solution will supply Toyota with 20 gigawatt-hours of high-nickel NCMA battery modules annually starting in 2025, manufactured at the South Korean company's Michigan facility.

The battery maker will invest about $3 billion in its Michigan facility to establish new production lines for battery cells and modules exclusively for the Japanese automaker — the completion for which is expected in 2025.

The $3 billion expansion is in addition to the $1.7 billion, 1.7-million-square-foot expansion LG is undertaking at its manufacturing campus in Holland in western Michigan.

An LG Energy Solution spokesman declined to provide details beyond the news release.

"LGES's agreement with Toyota, and resulting investment in its Holland facility, cements this region as a leader in battery manufacturing — a reputation earned by dozens of west Michigan companies that make up this region's battery manufacturing cluster," Jennifer Owens, president of the Lakeshore Advantage economic development organization, said in a written statement. "This type of investment sets us up to be successful, together, as a region that's on the map as a place that is future-focused, ripe with opportunity and a magnet for talent."

The battery modules made on the new lines will be shipped to Toyota Motor Manufacturing Kentucky, where they will be assembled into battery packs and installed in EVs.

"Today's announcement that LG Energy Solution and Toyota are partnering up to power electric vehicles in America right here in Michigan reaffirms our strategy to Make It in Michigan by building a landscape that encourages global investment while creating opportunities for people and communities across our state," Gov. Gretchen Whitmer said in a statement. "Together, we can continue growing our economy, creating good-paying jobs, and further cement Michigan as the global epicenter of the next revolution of the automotive industry."

The deal marks a big win for LG Energy Solution, which has already teamed with automakers including Honda and General Motors, which has three Ultium Cells battery plants with LG Energy, including one near Lansing. It also marks a departure from the battery producer's previous EV business models, which are generally arranged as joint ventures with automakers. The deal with Toyota is LG's largest single supply agreement secured outside a JV.

"We're excited to have Toyota, the best-selling global automaker, as our new customer," Youngsoo Kwon, CEO of LG Energy Solution, said in the release. "The agreement also presents another big opportunity for us to strengthen our production capacity in North America, thereby bringing more real-life, large-scale progress toward electrification in the region."

Crain's Detroit Business inquired with the Michigan Economic Development Corp. about what incentives the company will potentially be seeking for expansion and how many jobs it is expected to create.

— Crain's Grand Rapids Business reporter Kate Carlson, Crain's Detroit Business reporter David Eggert and Reuters contributed to this report.