LG wins subsidies for $1.7B EV battery plant expansion in Mich.

LG Energy Solution, the Korean manufacturing giant on an expansion binge in North America, won an incentive package for a $1.7 billion expansion of its battery-manufacturing facility in western Michigan, according to public disclosures.

The project in Holland, Mich., will create as many as 1,200 new jobs, paying an average of $1,257 a week, plus benefits, according to a memo published Tuesday by the Michigan Economic Development Corp. The Seoul-based company, which was spun out of parent LG Chem in January, has been approved to receive $56.5 million in incentives, and a 20-year tax break worth $132.6 million, according to the memo.

LG is planning construction of “several new facilities” that will quintuple the plant’s capacity to build battery components. The project includes construction of a cell manufacturing facility to supply EVs, and areas for safety tests and hazardous waste storage, the memo says. LG also considered facilities in the southeastern U.S., Poland and China.

“It is vital that the company get the incentive support it needs to remain competitive with other locations while being enabled to continue to improve the employee culture in Holland,” the state memo requesting the incentives said.

LG has had a presence in Holland since 2009 and employs 1,495 people in Michigan. The facility currently has five gigawatt-hours of capacity, according to LG.

Plans for Canada, Arizona

On Wednesday, LG Energy and Stellantis announced plans to establish a $4.1 billion EV battery plant in Windsor, Canada, in 2024.

Also this week, LG Energy Solution said it plans to invest 1.7 trillion Korean won ($1.4 billion) to build a battery factory in Arizona by 2024 to meet demand from “prominent startups” and other North American customers.

This will be its first U.S. factory to make cylindrical cells, a type of battery that has been used in Tesla and Lucid vehicles, LG said. Construction will begin in the second quarter of 2022, with mass production to start in 2024 with production capacity of 11 gigawatt hours, LG said in a statement.

Earlier, Reuters reported that potential customers would include EV makers Tesla, Lucid and Proterra and Philip Morris, maker of IQOS heated-tobacco sticks, among others. The report cited people familiar with the matter.

LG said in a statement that it plans to consider securing additional production capacity at its Arizona factory in the future.

Reuters contributed to this report.