LG Energy seeks to expand business in Japan with sales subsidiary

Industry

Published: 02 May. 2024, 16:23

LG Energy seeks to expand business in Japan with sales subsidiary

Rendered image of LG Energy Solution and Honda's battery plant in Ohio [LG ENERGY SOLUTION]

LG Energy Solution has established a sales subsidiary in Tokyo in its latest bid to jumpstart business with Japanese auto brands, which are currently accelerating a shift to EVs.

The Korean battery maker confirmed on Thursday that it officially completed the process in February and is currently forming a local sales team.

The move comes as part of efforts to expand sales and partnerships with Japanese automakers like Toyota and Honda. Rivals Samsung SDI has been operating a sales subsidiary in Tokyo since 2012 and SK On also has one in Japan.

LG Energy Solution is currently building a $4.4 billion battery plant in Ohio together with Honda Motor, with plans to start mass production in late 2025 with 40 gigawatt hours of production capacity.

In October, the Korean battery maker also inked a 10-year deal with Toyota to supply 20-gigawatt hours of NCMA — nickel, cobalt, manganese and aluminum-based — battery modules per year, enough for around 200,000 high-performance electric vehicles.

LG Energy Solution CEO Kim Dong-myung, center, and other officials from LG Energy, Honda Motor and the Ohio state government participate in a groundbreaking ceremony for the construction of an EV battery factory in Ohio last year. [LG ENERGY SOLUTION]

The deal is LG Energy's largest single supply agreement secured outside joint venture agreements, though the exact value has not been disclosed. The supply will start in 2025 and last for 10 years.

To cover Toyota's demand, the Korean company said it will invest an additional $3 billion in its Holland, Michigan battery factory to build a dedicated production line for the deal by the end of next year.

The battery maker's modules will be transferred to Toyota's plant in Georgetown, Kentucky, to be assembled into battery packs for the automaker's new electric vehicles in the North American region.

LG also supplies cylindrical batteries to Yokohama's Isuzu Motors, which claims over 30 percent of Japan’s commercial vehicle market and exports to over 100 countries all over the world.

Japan, the land of the hybrid car, has slowly been transitioning to pure EVs. A total of 88,535 electric vehicles were sold in the country last year, hitting a new record to account for 2.2 percent of all new passenger car sales.

BY SARAH CHEA [chea.sarah@joongang.co.kr]