LG Chem mulls North America, Europe expansion to meet EV battery demand

SEOUL -- LG Chem plans to triple production capacity for cylindrical batteries used by Tesla and others and is considering expansion in Europe and North America to meet surging demand, the supplier said on Wednesday.

The South Korean company forecast a further rise in its battery sales and profit in the fourth quarter after posting record quarterly earnings thanks to growing demand for EV batteries.

"Sales are continuously expected to grow thanks to greater shipments of automotive batteries and cylindrical batteries for EVs," said LG Chem, which also counts General Motors, Volkswagen Group and Hyundai as customers.

LG did not provide figures or a timeframe for its plans to triple cylindrical battery capacity. The supplier, along with CATL, supplies batteries for Tesla's made-in China models, while Panasonic makes batteries for Tesla's U.S-made cars. LG Chem also supplies batteries to Hyundai and Volvo.

LG Chem has production facilities in Poland, the U.S., South Korea and China.

CEO Hak Cheol Shin last week said that the company is in talks with a "couple" of automakers to create joint ventures to produce automotive batteries. LG Chem is already moving ahead with battery joint ventures with GM and Geely and hopes to expand to other automakers, Shin said, without elaborating.

LG Chem also said it was developing "new form-factor" cylindrical batteries which will boost energy density five-fold and power by six-fold, without elaborating. These are similar to targets that Tesla announced last month for its new batteries to be made in-house, called 4680 cells, to enable a 16 percent increase in range for Tesla vehicles.

Kona EV investigation

LG Chem said on Wednesday it had formed a task force with Hyundai to find the root cause of battery fires affecting some 14 Kona EVs in South Korea and abroad, as Hyundai plans al recall.

The batteries to petrochemicals maker reported a 159 percent jump in total operating profit to a record 902 billion won ($796 million) in the third quarter from a year earlier, in line with estimates.

Its battery division, which also includes small batteries used in Apple's iPhones, saw operating profit more than double from a year earlier to 169 billion won ($149 million), thanks to rising cylindrical battery sales, new EV launches by European automakers and higher sales of new mobile devices.

Operating profit at the mainstay petrochemical business also more than doubled to 722 billion won ($637 million), as the coronavirus crisis lifted demand for home appliances and hygiene products like surgical gloves.