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LG may supply LFP and 4680 batteries to Tesla and Toyota as it greenlights Arizona factory

New Arizona factory will make LFP and cylindrical batteries (image: LG)
New Arizona factory will make LFP and cylindrical batteries (image: LG)
LG confirmed a launch date for the mass production of its own LFP batteries like the ones used in the standard range Model 3 and Model Y which are supplied by China's CATL. It also said it will finalize a battery agreement with Tesla this year, as well as start a partnership with Toyota over EV cells.

LG may play a role in Toyota's newly announced pivot to purely electric vehicles as the CEO of its battery division confirmed that the joint venture with the world's biggest automaker is going ahead as planned. During its annual shareholder meeting, LG Energy also said that a new Tesla battery deal will be finalized by July, together with the Arizona battery factory plans:

We will build a new cylindrical, ESS, and lithium iron phosphate battery plant in Queen Creek, Arizona, USA. The construction of our own factory in Arizona will be an opportunity to preempt the rapidly growing North American electric vehicle and ESS market. We will provide value.

The big news coming from the shareholder event, however, is that LG Energy will start mass production of batteries with the cheaper and safer iron phosphate technology in 2025. Such LFP batteries are used by Tesla in its standard range Model 3 and Model Y vehicles to cut costs with some range sacrifice.

Tesla, however, warns that the base Model 3 may no longer qualify for the new EV tax credit of US$7,500 after the Treasury releases its guidelines on the made-in-US battery requirement. The LFP cells in the standard range Model 3, for instance, are made in China by the world's biggest EV battery maker CATL, so the US government may stop providing subsidies for such electric vehicles.

Procuring LFP batteries from LG may be one solution here, as South Korea has a free trade agreement with the US. Moreover, Korean EV battery makers started cleaning up their supply chain from Chinese raw materials and components, and doubled down on their US-based battery factory plans.

Samsung also announced that it is working on an LFP battery of its own to be released in a similar timeframe which would give EV makers another subsidy-approved supplier option. The LG LFP cells, however, may go to Tesla and Toyota given today's partnerships expansion announcement. The deals with the world's largest EV and legacy car makers could also include the 4680-style cylindrical batteries that LG is working on, too.

The safe and affordable iron phosphate battery technology is considered pivotal for the success of the next, mass market EV era of sub-US$25,000 cars like the upcoming Tesla Model 2 or the VW ID.2all, so LG's LFP factories may be positioned well as far as future demand goes.

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> Expert Reviews and News on Laptops, Smartphones and Tech Innovations > News > News Archive > Newsarchive 2023 03 > LG may supply LFP and 4680 batteries to Tesla and Toyota as it greenlights Arizona factory
Daniel Zlatev, 2023-03-24 (Update: 2023-03-24)