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Toyota and LG Sign U.S. Battery Manufacturing Deal

By
Laurance Yap
October 16, 2023
3
min
Toyota is making large and rapid investments to bring more EVs to market, and it recently signed a deal with LG to manufacture hundreds of thousands of EV batteries annually. The batteries will be made in Michigan for electric cars made in Kentucky.
Woman charging a Toyota bz4x
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U.S.-Made Batteries for U.S.-Made EVs

In a sure sign that Toyota is getting very serious about ramping up electric car development and sales, the company has signed a long-term, multi-billion dollar agreement with LG Energy Solution to produce batteries in the U.S., for cars made in the U.S., enabling the automaker to massively ramp up EV production, while making its vehicles eligible for federal purchase tax incentives, unlike the current bZ4X.

Enough Batteries for 400,000 Cars Annually

Under the new contract, LG will supply Toyota with battery modules at an annual capacity of 20 GWh (gigawatt-hours), starting in 2025. Assuming an average battery size of 50 kWh, that’s enough for about 400,000 new cars – or 200,000 new cars with a battery capacity of 100 kWh. The battery modules will use “pouch” type cells instead of cylindrical enclosures, making them more efficient to package, and will use nickel-cobalt-manganese-aluminum chemistry. They’ll be manufactured at LG’s battery factory in Michigan.

All of these new batteries will help support Toyota’s expansion of its EV lineup in the U.S., including its first new American-made electric vehicle, which will be assembled at Toyota’s factory in Kentucky in 2025. The factory currently builds the Toyota Camry, Lexus ES, and Toyota RAV4, including hybrid versions of all three.

A couple talking by a Toyota bz4x, that is parked and charging

New EV Batteries: Improved Range and Charging Performance

In September, Toyota announced details of its “battery technology roadmap,” which included new high-tech batteries arriving in 2026 and onwards that will offer close to 500 miles of range, EPA estimated, as well as extremely rapid charging. It’s unclear whether these new batteries manufactured by LG in the U.S. will feature this new tech, though we expect they’ll offer competitive range and charging speed.

LG’s pouch cells will integrate with advanced battery management systems from Toyota to provide optimum efficiency and performance. The company says that thermal management technology continues to improve, making the high-nickel content NCMA batteries safer than ever before. LG has been manufacturing lithium-ion batteries for over three decades, and the agreement with Toyota lets the further strengthen its production capacity in the U.S.

EV being charged

Toyota’s Ambitious EV Roadmap

Toyota has said that, after lagging behind the industry in bringing full-electric vehicles to market, that it intends to offer 30 new electric vehicles globally between the Toyota and Lexus brands, with the goal of producing and selling up to 3.5 million electric vehicles per year by 2030.

“At Toyota, our goal is to reduce carbon emissions as much as possible, as fast as possible,” said Tetsuo Ogawa, president and CEO of Toyota North America. “Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-pathway approach and growth plans for BEVs in North America is critical to achieve our manufacturing and carbon reduction plans. Working with LG Energy Solution, we are excited to be able to offer products that will provide the performance and quality our customers expect.”

LG Energy olution battery

$3 Billion Investment in Michigan

LG will make significant upgrades to its Michigan battery factory in order to meet the demand from Toyota. Indeed, it will invest about $3 billion U.S. between now and 2025, to establish new production lines for battery cells and modules, which will be dedicated to the Toyota-bound batteries.

The deal with Toyota is the largest supply agreement ever signed by LG Energy Solution outside of its joint ventures. LG now supplies batteries to five of the largest global automakers and has eight battery manufacturing facilities in North America that are either active or under construction.

Front view of a Tesla Model 3 driving through canyon roads

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