LG Chem to supply Volvo with EV batteries

South Korean battery producer LG Chem has landed a contract to produce power packs for Volvo and Polestar electric vehicles (EVs) over the next decade.

Terms of the agreement, such as pricing and sales volumes, were undisclosed, although LG Chem described the deal as a large-scale order. Volvo from this year is offering electric versions of all new models, with it aiming for EVs to make up half of its global sales volume by 2025. Volvo's sales rose by 12pc in 2018 to more than 642,000 vehicles and climbed a further 9.4pc in this year's first quarter.

Volvo said its contracts with LG Chem and Chinese battery producer CATL will ensure its supplies of EV batteries over the next decade. Battery purchases under the agreements will total billions of dollars, the company said, without providing a specific value.

Volvo, which was acquired by China's Geely Holding in 2010, is employing a modular platform design that will be applied to multiple models, meaning battery packs and other systems do not have to be designed separately for each car. The company earlier this year new electric power train options that will be made available across its entire model range.

LG Chem plans to more than triple its production capacity to 100GWh/yr by 2020 after raising its growth targets at least twice since last September. The company may triple the annual production capacity at its European plant, located in Poland, to 300,000 batteries by April 2021.

LG Chem supplies batteries to 13 of the world's 20 largest car brands, including Europe's Volkswagen, Mercedes-Benz, Volvo and Renault.

LG Chem said its EV battery sales will double this year to 10 trillion won ($8.4bn), while its growth will accelerate after 2020 when third-generation EVs hit showrooms.