On Tuesday, industry sources revealed that Japanese automotive maker Toyota has agreed to shift a $1.5 billion order to LG Energy Solution, which had been experiencing customer losses.
LG Energy Solution was establishing a battery factory in Lansing, Michigan, through a joint venture with General Motors. However, at the end of last year, General Motors withdrew from the project, prompting LG Energy Solution to acquire GM’s $1 billion stake in the facility.
According to Bloomberg, Toyota has agreed to transfer its existing orders from other LG factories in Michigan to the Lansing factory once LG completes its acquisition. The full takeover is anticipated to occur this spring. Sources indicate that the total value of the transferred orders amounts to $1.5 billion.
Korean firms have invested $54 billion in U.S. electric vehicle battery plants in anticipation of an EV boom fueled by subsidies from former President Joe Biden’s Inflation Reduction Act. However, LG, the world’s third-largest EV battery manufacturer, is now tightening its belt as automakers scale back EV plans and the White House threatens to roll back policies supporting electric vehicles.
Toyota is sourcing LG batteries suitable for both fully electric and hybrid vehicles. Hybrid vehicles typically require fewer cells, which often translates to lower profit margins for battery manufacturers.
LG also plans to allocate part of the factory’s production capacity to energy storage devices, capitalizing on the surging demand driven by the AI data center boom.
LG said in an official statement, “This move is part of our strategic initiative to optimize North American investments and meet the evolving demands of global automakers.”