LG Chem mulls Europe, U.S. expansion to meet EV battery demand

SEOUL -- LG Chem plans to triple production capacity for EV batteries used by Tesla, General Motors, Volkswagen and others, and is considering expansion in Europe and North America to meet surging demand.

The South Korean company on Wednesday forecast a further rise in its battery sales and profit in the fourth quarter after posting record third-quarter earnings because of booming sales of EV batteries.

"Sales are continuously expected to grow thanks to greater shipments of automotive batteries and cylindrical batteries for EVs," LG Chem said.

The supplier, along with CATL, supplies batteries for Tesla's made-in China models, while Panasonic makes batteries for Tesla's U.S-made cars. LG Chem also supplies batteries to Hyundai and Volvo.

LG Chem has production facilities in Poland, the U.S., South Korea and China.

CEO Hak Cheol Shin last week said that the company is in talks with a "couple" of automakers to create joint ventures to produce automotive batteries. LG Chem is already moving ahead with battery joint ventures with GM and Geely and hopes to expand to other automakers, Shin said, without elaborating.

LG Chem also said it was developing "new form-factor" cylindrical batteries which will boost energy density five-fold and power by six-fold, without elaborating. These are similar to targets that Tesla announced last month for its new batteries to be made in-house, called 4680 cells, to enable a 16 percent increase in range for Tesla vehicles.

LG Chem reported a 159 percent jump in total operating profit to a record 902 billion won ($797 million) in the third quarter.

Its battery division, which also includes small batteries used in Apple's iPhones, saw operating profit more than double from a year earlier to 169 billion won, thanks to rising cylindrical battery sales, new EV launches by European automakers and higher sales of new mobile devices.

Operating profit at the mainstay petrochemical business also more than doubled to 722 billion won, as the coronavirus crisis lifted demand for home appliances and hygiene products such as surgical gloves.

LG Chem said on Wednesday it had formed a task force with Hyundai to find the root cause of battery fires affecting some 14 Kona EVs in South Korea and abroad, as Hyundai plans to recall Kona EVs.