LGES, Chinese firms to partner on low-cost EV batteries in Europe

South Korea’s LG Energy Solution (LGES) is actively negotiating with approximately three Chinese suppliers to produce low-cost electric vehicle (EV) batteries for the European market.

This move comes amid intensifying competition following the European Union’s recent imposition of additional tariffs on China-built EVs, which could reach up to 38 per cent following an anti-subsidy probe.

The potential partnerships highlight the pressure on non-Chinese battery firms, like LGES, to reduce costs as they face competition from cheaper Chinese rivals.

The global EV industry is experiencing a marked slowdown in demand, pushing automakers to seek out more affordable battery options.

Wonjoon Suh, head of LGES’s advanced automotive battery division, revealed that discussions are underway with Chinese firms to co-develop and produce lithium iron phosphate (LFP) cathodes for the European market.

While Suh did not disclose the companies involved, he mentioned that joint ventures and long-term supply agreements are being considered. The goal is to reduce LGES’s LFP battery manufacturing costs to levels comparable to those of Chinese competitors within three years.

LFP cathodes, although not as energy-dense as nickel-based alternatives used in longer-range EVs like Tesla, are safer and more cost-effective due to the abundance of materials used in their production.

Chinese companies, such as Hunan Yuneng New Energy Battery Material, Shenzhen Dynanonic, and Hubei Wanrun New Energy Technology, dominate the global LFP cathode supply market.

Suh noted that LGES is exploring production sites in Morocco, Finland, and Indonesia to collaborate with Chinese firms on LFP cathode production for Europe.

While LGES is in talks with automakers across the United States, Europe, and Asia for LFP battery supply deals, Europe shows a stronger demand for affordable EV models. Affordable EVs account for about half of the region’s sales, a higher proportion than in the US.

In a related development, Renault recently announced its plans to incorporate LFP battery technology in its mass production of EVs, partnering with both LGES and its Chinese competitor CATL to establish a supply chain in Europe.

Attribution: Reuters.