Audi signs deal to use LG batteries

LG Chem, Korea’s largest chemical company, will supply electric vehicle (EV) batteries for Volkswagen Group’s Audi as it aims to strengthen its standing as a top player in large batteries.

The affiliate of LG Group said yesterday that its battery will be used in Audi’s next generation of plug-in hybrid and micro-hybrid EVs, which use a 48-volt lithium-ion battery instead of a 12-volt lead storage battery. Details of the contract with the German premium automaker have not been revealed.

The company hinted that it will collect several hundred billion won through the contract and wants to see additional orders from Volkswagen Group if its other affiliates also decide to use the battery in their cars.

“Since Volkswagen Group is aiming to become the No. 1 player in the global EV market by 2018 and trying to expand EV models, we are positive that we will get additional orders,” said an LG Chem spokesman.

Volkswagen Group, the world’s second-largest automotive group by sales, also owns premium brands such as Audi and Porsche. Sweden’s Scania, Czech Republic’s Skoda, Spain’s SEAT, Italy’s Lamborghini and United Kingdom’s Bentley are also under Volkswagen Group.

LG Chem now supplies EV batteries to six out of the top 10 automotive groups in the world, including General Motors, Renault-Nissan Alliance, Ford and Hyundai-Kia.

By 2018, LG Chem aims to collect 10 trillion won ($9.7 billion) in revenue from its mid- to large-size batteries and to become the world’s top EV battery and energy storage systems company.

“We became a market-leading company in just 10 years after entering the mid-large size battery business, but still we strive to become the clear top player,” said LG Chem President Kwon Young-soo, who oversees the company’s battery business. “We will aggressively explore the market, so that people can see EV and ESS with LG Chem batteries wherever they go.”

According to data from Japan-based consulting firm B3, the EV battery market is expected to grow to 13.2 trillion won by 2018, more than double the current market which is estimated to be worth 5.3 trillion won.

But LG Chem is not the only Korean company eyeing the growing EV battery market.

Samsung SDI, the nation’s top battery maker under Samsung Group, last month signed a deal with Germany’s BMW Group to cooperate in its EV battery supply and to conduct joint research. Samsung SDI already has contracts with Volkswagen, Chrysler, Ford and Mahindra.

The two battery giants are now expected to clash in China, where they will both run EV battery factories starting next year.

Samsung SDI on Monday broke ground on its plant in Xi’an, a northwestern industrial city in China. It aims to have the facility operating by October 2015 and to produce some 40,000 units of battery cells for EVs per year. The company plans to invest $600 million by 2020.

LG Chem plans to be producing batteries at its plant in Nanjing by the end of next year. Its annual production volume will be able to supply 100,000 EVs, according to the company. LG Chem said its goal is to collect more than 1 trillion won per year in China by 2020.

BY JOO KYUNG-DON [kjoo@joongang.co.kr]