Global carmaker Volkswagen Group has signed a 13 trillion won deal with LG Chem to be supplied with electric vehicle batteries.
This is the second accomplishment for the South Korean company following its win in an 8 trillion won bid against China’s largest electric vehicle battery maker CATL. LG Chem has now won contracts worth a total of 21 trillion won from the German car maker, which is as large as 85 percent of LG Chem’s yearly revenue (25.98 trillion won as of last year).
The LG Chem-Volkswagen supply deal is part of the German carmaker’s 20 billion euros (26 trillion won) contracts it has signed with global battery makers to respond to the Chinese and European market demands. “LG Chem will supply half of the total supply volume, which is worth 13 trillion won,” said a high-ranking source of LG Group.
Many say that LG has established itself as a partner of Volkswagen Group with the latest deal. Global prestigious automaker comprising 12 brands, such as Volkswagen, Audi, Porsche and Bentley, Volkswagen Group has pledged that it will electrify its entire model portfolio by 2030. The automaker also launched “Modular Electric Drive” project last year, which is a flexible modular system for manufacturing electric vehicles.
“Against the backdrop, where global automakers are expanding production of electric cars, LG Chem has set a great record in battery performance and stability,” said a source from the local battery industry. “The company can now expect to win additional contracts in other regions, such as North America.”
LG Chem has chosen electric battery as their future growth engine and is focusing investment in the business. It has supplied electric car batteries worth a total of 21 trillion won to Volkswagen, 8 trillion won last year and 13 trillion won this year. This means more than half of electric car batteries manufactured by LG Chem goes to Volkswagen Group.
It is reported that LG Chem will produce batteries for the German carmaker in their factories in Poland, which is the company’s electric battery production hub for the European market, and Nanjing, China.
“We are planning to build a large production complex in Europe by 2022,” said LG Chem Vice President Park Jin-soo at a press conference held on March 9. LG Chem has signed battery supply contracts with other global carmakers, including General Motors, Ford, Hyundai Kia Motor Group and Mahindra& Mahindra of India.
Dong-Il Seo firstname.lastname@example.org