LG Chem is establishing a joint venture for electric vehicle batteries with China's "Local Brand No. 1" Geely Automobile to target China, the world's largest electric vehicle market.
On May 12, LG Chem said it signed a joint venture deal with the Geely Automobile at the Geely Automobile Research Center in Zhejiang, China. The two companies each invest $87.2 million in a 50:50 stake.
The factory site and corporate name will be finalized later, and construction will begin at the end of this year and will be able to produce 10GWh of electric vehicle batteries by the end of 2021. Batteries produced by the joint venture will be supplied to Geely Automobile and its subsidiary's electric vehicles starting in 2022.
LG Chem has been steadily reviewing cooperation with local battery makers and carmakers to make inroads into the Chinese market.
The company said it will be able to establish a joint venture with Geely Automobile, which can secure stable supplies by maintaining its differentiated independent technology. The establishment of the joint venture will pave the way for LG Chem to tap the Chinese market, which accounts for 50 percent of the global electric vehicle market.
In particular, it is evaluated that it has secured a structure that can supply batteries reliably to China's electric vehicle market, where subsidy policy will end after 2021.
"While battery makers around the world are pushing for various joint ventures to advance into the Chinese market, LG Chem has secured Geely Automobile as a partner, gaining an advantage in tapping into the Chinese market," said Kim Jong-hyun, head of LG Chem's battery business division.
Meanwhile, sales of electric vehicles in China are expected to grow rapidly from 1.5 million units in 2020 to 3.5 million units in 2023 and 5.8 million units in 2025, according to Mirae Asset Daewoo Research Center.