(Reuters) – LG Chem , the world’s top electric vehicle (EV) battery maker, is in talks with a “couple” of automakers to create joint ventures to produce automotive batteries, Chief Executive Officer Hak Cheol Shin told Reuters on Friday.
The logo of LG Chem is seen at its office building in Seoul, South Korea, October 16, 2020. REUTERS/Kim Hong-Ji/Files
LG Chem is already moving ahead with battery joint ventures with GM and Geely and hopes to expand to other car makers, Shin said, without elaborating.
“Our joint ventures with Geely and GM have been already announced, and we have ongoing discussions with a couple of other automakers,” he said.
The South Korean company currently supplies batteries from its Nanjing, China, factory for Model 3 vehicles built at Tesla’s Shanghai plant.
“We have started supplying to Tesla in earnest, and this is the beginning of a good partnership and we hope to expand the partnership,” he said.
“We are in talks to expand cooperation with almost all automakers, and Tesla is one of them,” he said.
However, Shin added that Tesla is not one of the companies LG Chem is discussing joint ventures with at this point.
LG Chem shares, which rallied earlier this year, have lost steam on its plan to split off its battery business and fire risks associated with its batteries supplied for Hyundai Motor’s Kona and GM’s Bolt.
Shin defended the plan to separate the battery business as necessary to fund large-scale investments in factory expansion. The unit will first become a wholly-owned subsidiary tentatively named LG Energy Solutions and then up to 30% of the company may be listed in an initial offering in about a year.
“To maintain our number one position in the face of rising competition from Chinese firms and others, we need to pour capital into battery production and research,” he said.
LG Chem is looking for a site to build a new factory in Europe, as it plans to more than double its global car battery capacity to 260 gigawatt hours (GWh) by 2023, from 120 GWh this year.
To tackle the concerns around battery safety, Shin said that LG Chem has formed a task force with Hyundai Motor and the South Korean government to find the root cause of the battery fires in the Kona EV.
South Korea’s transport ministry said Hyundai will recall the Kona EV because of possible faulty manufacturing of its battery cells that could pose a fire risk.
However, LG Chem denies that faulty battery cells were the cause of the fires and the exact cause had not been determined.
LG Chem is also looking at building new petrochemical production facilities in the United States and Southeast Asia to drive growth for its mainstay petrochemicals business, Shin said.
“We see the future of LG Chem would be bright after the split-off,” he said.