European battery investment estimated to be over 1 trillion won
LG Chem will build an additional battery plant in Poland, the essential advanced base for the European electric vehicle (EV) battery market. The investment amount is expected to exceed 400 billion won. LG Chem's investment in European battery plants, including the existing Wroclaw plant, is expected to exceed 1 trillion won.
On the 29th, according to industry sources, LG Chem decided to set up a second European battery plant in Łódź, Poland. The groundbreaking ceremony may be held in the second half of this year at the earliest. The initial investment is expected to be 400 billion won. Four battery cell lines will be established. Its scale was designed to be similar to the first plant in Kobierzyce, near Wroclaw, south-western Poland. The annual production capacity is reported to be around 10 GWh (GWh)
Łódź is 120 km southwest of the Polish capital, Warsaw. It is about 180km from Wroclaw. Not only the accessibility to existing factories, but the location was decided by also considering cooperation with European automakers like Volkswagen, Audi, Daimler, Porsche, Renault, and Volvo.
Every year, LG Chem has increased its battery production target. LG Chem announced its 2020 target to be 70GWh in 2017, which was increased to 90GWh by 2020 in the second quarter of last year. In addition, a 20% increase was also reported in the fourth quarter. The final target is now 100~110 GWh. Upon the completion of the Łódź plant, LG Chem's annual battery production will increase to 120 GWh.
The surge in EV battery demand is one of the reasons behind the investment in the Łódź plant. According to Belgian daily news L'Echo, Audi reportedly cut its production of e-Tron, the first mass-produced EV, from 55,830 to 40,542, due to the failure to secure LG Chem batteries. Łódź is designated as a special economic zone, which provides the benefit of an income tax deduction for up to 50% of the investment.
An official in the industry said, "LG Chem's Wroclaw plant is receiving equipment orders for three production lines with additional investment. LG Chem's EV battery investment this year will be aggressive."
Recently, LG Chem has also been issued the Green Bond (worth 1.78 trillion won), an international bond issued simultaneously in major global financial markets including the US, Europe, and Asia. The secured funds will be used as investment funds to supply EV battery order quantity. An official of LG Chem said, "We are considering the construction of additional factories across Europe, and no decision has been made."