LG Energy Solution and Toyota Motor North America (TMNA) have entered into a supply agreement that involves a $3 billion investment in a West Michigan plant. This agreement will see LG Energy Solution (LGES) providing TMNA with lithium-ion batteries for electric vehicles (EVs) manufactured in the United States.
The expansion announcement pertains to the LGES plant located in Holland, Michigan. The Michigan Economic Development Corporation has confirmed the news, expressing their enthusiasm for the investment. As part of the agreement, LGES will invest approximately $3 billion in its Holland facility to establish new production lines dedicated to manufacturing battery cells and modules exclusively for Toyota. The upgrade is anticipated to be completed by 2025.
The partnership between LGES and Toyota is driven by the shared goal of reducing carbon emissions and accelerating the adoption of EVs. Tetsuo “Ted” Ogawa, President and CEO of TMNA, emphasized the importance of secure supplies of lithium-ion batteries at scale to support Toyota’s growth plans for battery electric vehicles (BEVs) in North America. This partnership will enable Toyota to deliver products that meet the performance and quality expectations of their customers.
The announcement has received positive feedback from Governor Gretchen Whitmer, who sees it as a testament to Michigan’s commitment to attracting global investment and creating job opportunities. Bridging global investment with local economic growth, the partnership will propel the state’s economy and solidify Michigan’s position as the epicenter for the automotive industry’s next revolution.
At the city council meeting, Holland City Manager Keith Van Beek highlighted the significance of this investment, dubbing it as phase three of the plant’s expansion. However, Van Beek clarified that despite the announcement, additional considerations and negotiations are required before finalizing the expansion.
The Holland plant has already undergone significant expansion, starting in 2022 when LGES invested over $1.7 billion to add one million square feet to the facility. This expansion was expected to conclude in 2024. The current expansion will likely not require new employees, as LGES utilizes smart factory technology that maximizes efficiency and minimizes labor requirements.
In terms of incentives, the city of Holland is contemplating a 50% tax forgiveness over the next 12 years. Van Beek believes that this would be a favorable outcome compared to no investment at all. The city initially invested $10 million in constructing a substation to meet the plant’s electricity demands and clarified that any additional necessary infrastructure upgrades would need to be funded by the state or the company.
For LGES, this agreement with Toyota represents the largest single supply contract it has signed, highlighting the company’s position as a leading supplier to the world’s top five automakers.
TMNA plans to introduce 30 battery EV models globally by 2030 under its Toyota and Lexus brands. This ambitious goal aligns with the automotive industry’s shift toward environmentally friendly transportation and the growing demand for EVs.
The partnership between LG Energy Solution and Toyota is a significant step in advancing the EV market in the United States and bringing economic growth to Michigan. As the automotive industry continues to embrace clean energy solutions, collaborations like this one will play a crucial role in driving the transition to a more sustainable future.