Ultium Cells, a battery joint venture between LG Energy Solution and General Motors, has started production at its second plant in Tennessee, the US. The first product has been delivered to customers and is expected to power the Cadillac Lyriq and other third-generation EVs.
According to South Korea-based Chosun Biz and Seoul Economic Daily, Ultium Cell has introduced automated production processes and equipment at its second factory. The company also adopted the most advanced quality checking and flaws-detecting methods to improve production efficiency significantly. It plans to increase the production capacity to 50GWh.
Sources close to LGES said Ultium Cells will try its best to reduce issues and achieve stable operation at the second plant. The plant will become a production hub for the North American EV market with the company's first and third factories.
Ultium Cells opened its first plant in Ohio and began mass production in November 2022. Its third plant, located in Michigan, is scheduled to start volume production in 2025.
In addition to the partnership with GM, LGES is running or constructing joint battery production facilities with Hyundai Motor Group, Honda, and Stellantis. The South Korean company also operates and plans self-owned factories in Michigan and Arizona.
Although LGES continues to expand its production capacity, factory utilization at its Polish and Chinese facilities has decreased since the second half of 2023. As the growth of the EV market slows, LGES is unlikely to report a strong performance for the first quarter of 2024. The industry estimated that the company will reach KRW123.4 billion (US$91.36 million) in operating profits, down by 76.8% year-on-year.
The effect of China's battery over-capacity is spilling over to Europe and other markets, creating pressure on South Korean companies. According to industry estimates, China will need 1,200GWh of batteries at most next year, while local battery makers will have a total capacity of four times the demand.
Chinese companies will sell their batteries overseas at low prices. CATL will reportedly offer LFP battery modules at CNY0.4 (US$0.055) per Watt-hour in the second half of 2024. Each kilowatt-hour will cost US$75, 50% of the market average.
According to South Korea-based SNE Research, Chinese battery makers saw their market share outside China grow from 9.2% in 2019 to 34.6% in 2023. The total market share of LGES, SK On, and Samsung SDI declined from 90.8% to 65.4% in the same period.
