LG Chem plans another EV battery plant in China

South Korea's LG Chem plans to build a electric vehicle (EV) battery plant in Nanjing, China, its second such factory in Jiangsu province's capital city, to strengthen its foothold in the world's largest market for EVs.

LG said it will invest 2.1 trillion won ($1.85bn) in the complex by 2023, with annual production capacity of more than 500,000 units by then. The high-performance batteries will allow EVs to travel 320km on a single charge. The first phase of production from the new plant is scheduled to begin by late next year.

LG's EV complex is in Nanjing's Binjiang economic development zone. The company also has a small EV battery plant in the Xinjiang economic development zone, just 45km away, as well as a joint-venture factory in Wuxi, 180km away, that will produce the anode materials for its batteries. LG plans to produce 40,000 t/yr of cathode material starting in 2020.

LG's announcement comes just two weeks after rival SK Innovation said it would build a battery component plant in Jiangsu province, at the same complex where it and two Chinese partners are building an EV battery plant.

South Korean battery producers are following a similar strategy in expanding beyond their home market by setting up production and supply bases in key EV markets around the world, including China, the US and Europe. LG's expanding factory in Poland will supply EV batteries under a contract signed earlier this month with German automaker Volkswagen.

LG plans to have capacity to produce 1.5mn EV batteries annually by 2020. The company cited market research showing that global EV demand will more than triple by 2025 to 22mn units.

China accounted for 58pc of global EV sales last year and continues to see rapid growth, partly because of generous subsidies given to car buyers. But since 2016 Beijing has excluded cars equipped with South Korean batteries from qualifying for the programme, protecting Chinese companies from fierce competition. The market could become more even in 2020 when China's EV subsidies are scheduled to expire.