The executives of Hyundai Motor Group and LG Group discussed ways to cooperate on electric vehicle (EV) batteries. This is the first time that the two companies have had individual meetings for business.
On the 22nd, the senior vice-president of Hyundai Motor Group, including Hyundai and Kia’s R&D Headquarters President Albert Wiermann, President of the Planning and Coordination Office, Kim Gul, President of Merchandise Servo Shin, and President of Hyundai Mobis Park Jeong-guk visited the LG Chemical Ochang Plant. At LG, Chairman Kwang-mo Koo and Vice-chairman Kwon Young-soo, Vice-chairman Shin Hak-cheol of LG Chem, Jong-hyun Kim (President of Battery Business Division), and Myung-Hwan Kim (President of Battery Research Institute) attended.
The management of the two companies exchanged opinions on future battery business. They shared the technology and development direction of future batteries, such as lithium-sulfur batteries, and all-solid batteries. They also looked at the battery production line at LG’s Ochang battery plant.
Hyundai Motor Group selected LG Chem as the next-generation electric vehicle platform secondary battery provider to be introduced next year. SK Innovation is the primary supplier.
An official from LG Group said, “LG Chemical is accelerating the development of technology that will become a game changer in the future battery field, such as long-life lithium-ion battery, lithium-sulfur battery, and all-solid battery.”
An official from Hyundai Motor Group said, “Hyundai and Kia are researching related technologies to realize the optimized battery performance required for electric vehicles.” “It’s a dimension to share the direction of development.”
It is said that LG Chem and Hyundai Motor are pushing to establish a joint venture for electric vehicle (EV) batteries. When the joint venture is established, it is expected that Hyundai Motor will secure the battery capacity to be used for the next generation electric vehicle platform ‘E-GMP’ and that LG Chem will provide a stable source of supply.
According to the industry sources, LG Chem is planning to establish a battery manufacturing joint venture with Hyundai Motor. It is said to have left only the signature. Indonesia is a site for the new battery factory. Indonesia has large reserves of nickel. Thanks to this, it is easy to secure the cathode material, which is the core material for the NCM and NCA battery. The Indonesian government is also active in attracting manufacturers. This is a favorable location for the establishment of a battery joint venture, such as Hyundai’s plan to build a 250,000-unit/year car plant. It can be a hub for fast-growing Southeast Asian electric vehicles and e-bikes market.
“The Indonesian government was also very active in wooing LG Chem again, and the senior vice president of Hyundai Motor Company, Jung-Sun Jung, decided to build a factory in Indonesia. Most of the Southeast Asian car market is dominated by Japanese makers. Same goes for motorbikes. It is also meant to penetrate the market, so both companies can create synergies with a battery joint venture in Indonesia” – industry source has said.
Reportedly Indonesian government is to provide subsidies for the project, while battery companies are expected to invest over $1.6 billion in the country. The costs of building battery factories in South Korea is estimated at $83 million per GWh. The Indonesian Hyundai-LG Chem facility capacity is expected to be in a range of 15-20GWh. This range is needed to achieve economies of scale in the current market environment.
This is not the first time a joint venture between Hyundai Motor and LG Group has been established. In 2010, Hyundai Mobis and LG Chem, a subsidiary of the Hyundai Motor Group, established H. Green Power, a joint venture for electric vehicle battery packs. The equity ratio was 51% for Hyundai Mobis and 49% for LG Chem. Although the specific share ratio of the battery joint venture has not been reported, it is reported that the two companies will be equal. The joint venture with General Motors (GM) and Geely Motors was equal at a 50:50 ratio. According to industry sources, the two companies have discussed establishing a battery joint venture since last year. It also came up with plans to utilize the site of Hyundai Steel in Dangjin, Chungnam. However, there was a difference of opinion regarding the split of shares, quantity, and battery prices, and it took time to finalize.
At first experts said the meeting at Ochang LG plant was not related to the establishment of a joint venture. An industry source said, “LG Chemical discussed the battery cell joint venture with Vietnam’s largest company, the Vin Group.”
If Hyundai Motors establishes a battery joint venture with LG Chem, SK E&C’s two-top system will be the source of battery for E-GMP electric vehicles, which will be mass-produced early next year. This means that the source of the battery established by Hyundai Motors = LG Chem and Kia Motors = SK Innovation will remain intact for the time being.
LG Chemical’s Ochang plant was LG’s largest battery plant before the establishment of the Wroclaw factory in Poland, which is around two times larger (Ochang factory capacity is around 10 GWh, Wroclaw’s is around 20 GWh). Currently the largest battery makers for EVs are (ranked by number of shipments) CATL, LG Chem, Panasonic, BYD and Samsung SDI.