LG Energy to supply EV batteries to Mercedes-Benz in N.America
Sang Hoon Sung
7 HOURS AGO
The G 580, Mercedes-Benz’s electric G-Class SUV (File photo by Mercedes-Benz) LG Energy Solution Ltd., the world’s third-largest electric vehicle battery manufacturer, is set to supply cells to Mercedes-Benz AG, a German luxury carmaker, in a deal of estimated billions of dollars, sending its share price to a 10-month high.
LG Energy said on Tuesday it signed a contract with a Mercedes-Benz affiliate to supply batteries of 50.5 gigawatt-hours (GWh), enough for about 630,000 EVs from January 2028 to December 2038 in North America and other markets in a regulatory filing.
“The deal provided us with opportunities to beat Chinese rivals,” said an LG Energy official.
The deal’s value was estimated at billions of dollars, industry sources in Seoul said, although the leading South Korean battery maker declined to provide further details such as financial terms, citing a non-disclosure agreement with the customer.
LG Energy’s share price rose as much as 5.7% to 444,000 won ($329.1), the highest since Dec. 1, 2023, in the South Korean main stock market. The share ended up 3.9% at 436,500 won, far outperforming a 0.6% loss in the benchmark Kospi.
46 MM DIAMETER CELLS IN ARIZONA
LG Energy plans to supply cylindrical batteries of 46-millimeter (mm) diameter to be produced at its factory in its Arizona production complex to Mercedes Benz.
The battery maker has been building a production line dedicated to the high-performance batteries since April at the complex with a schedule to complete the line by 2027.
A bird's-eye view of LG Energy's battery plant in Queen Creek, Arizona (File photo by LG Energy) The cylindrical battery with 46 mm diameter is being heralded as a game-changer in the battery industry as it is known to increase energy density by five times and output by six times compared to the conventional 2170 type, which measures 21 mm in diameter and 70 mm in length.
An EV needs 3,000-4,000 units of the 2170 batteries, increasing the vehicle’s weight and reducing its energy efficiency. On the other hand, about 600-1,300 units of batteries with 48 mm diameter are required for an EV, reducing the vehicle’s weight and improving its efficiency by more than 20%, industry sources said.
The new battery is also known to reduce the risk of thermal runaway as the larger cylindrical cell provides more space for ventilation, they added.
MASS PRODUCTION OF 4680 BATTERIES
LG Energy aims to start mass production of cylindrical batteries with the 4680 form factor of 46 mm in diameter and 80 mm in length, at its South Korean factory in December for Tesla Inc., the world’s second-largest EV maker.
The company is expected to win deals from other EV makers to supply the 4680 batteries once the plant in Ochang, North Chungcheong Province, meets targeted production yields and energy efficiency, industry sources said.
Potential battery contracts with other EV manufacturers are expected to help LG Energy recover its sluggish earnings amid the prolonged slowdown in the global EV industry, they added.
The company said its operating profit fell 38.7% to 448.3 billion won in the third quarter from a year earlier on a consolidated basis as sales slid 16.4% to 6.9 trillion won.