LG battery plant in Holland sees storage as growth opportunity

LG Energy Solution plans to produce enough batteries to plug the holes in the strained U.S. electrical grid that make installing electric vehicle charging stations difficult in rural areas.

How? By producing batteries large enough to be installed anywhere that capture enough solar and wind power to charge vehicles.

The South Korean battery maker, the largest in the country, completed expansion of its Holland, Michigan, facility this month. The plant, operational since 2012, produces automotive vehicle batteries for partners including General Motors, Honda and Hyundai Motors.

But the decision to use an over $1.4 billion investment to expand in a new direction ― manufacturing batteries for storage systems in addition to those for automotive use ― came two years ago, said Jaehong Park, CEO of LG Energy Vertech Inc., the company's energy storage branch, told media on June 24.

“There were multiple drivers at the time. We found that the EV demand was down,” Park said. “Plus, there was always concern whether we can have enough engineering resources, technicians, in the facility.”

Adding production of batteries for energy storage applications at its plant not only offers two revenue sources for battery technology ― making and charging batteries that power vehicles ― but it insulates the company from future headwinds at a critical time and demonstrates the resilience of battery production, according to North American President Bob Lee.

“Traditionally, large scale energy storage is not always easy. We depended on hills with a lake for hydro applications or large spaces for compressed air,” he said. “Those are things you can't put anywhere. We have a solution: We can provide energy storage in any location where the energy is being used.”

Demand for energy storage systems, or ESS batteries, is only increasing, and the flexibility when installing them is what makes the business model so durable, Lee said. Not only can ESS batteries charge vehicles through energy captured from so-called clean energy sources, but it can offset some strain from artificial intelligence data centers.

Cell production is up now and can finish 30% of the packing of cells in Holland, the company said. By August, LG Energy Solutions plans to supplement cell packing at a retrofitted plant in the Chicago suburb of Madison, Illinois.

Once fully operational, the company plans to produce close to three times as many energy storage batteries as electric vehicle batteries.

Producers of vehicle batteries, technically known as “cells,” measure annual capacity not in terms of number of cells produced but instead in the total energy capacity of those batteries, according to the Federal Reserve Bank of Dallas.

Gigafactories are manufacturing sites whose annual capacity exceeds 1 gigawatt hour, or 1 billion watt hours. For context, the entire U.S. generates several million gigawatt hours of electricity every year.

An EV battery pack has a capacity between 50 and 100 kilowatt hours, the Federal Reserve Bank also notes, and a gigafactory with 1 gigawatt hour capacity operating at full capacity could produce enough batteries annually to power 10,000 to 20,000 electric vehicles.

LG’s Holland facility now has 16.5 gigawatt-hours of energy storage systems production capacity, Tristan Doherty, LG’s chief product officer, told media ― enough to power roughly 165,000 electric vehicles per year. Capacity to produce automotive batteries reaches 5 gigawatt hours, making the total power produced at the plant an estimated 21.5 gigawatt hours.

Still, the company said it was prepared to “more than double” current capacity.

LG's Holland factory began producing nickel-rich batteries most automakers use for electric vehicle batteries, the mixture of nickel, manganese and cobalt.

Starting this May, the company became the first in the U.S. to produce lithium-iron-phosphate batteries, a less energy dense battery type.

Using more iron has drawbacks, Lee said, including less charging capacity, but companies using the configuration get additional cost-cutting benefits, which allows for more competitive pricing models. Because automakers like General Motors estimate the cost of batteries to be over a third of the total cost of an electric vehicle, lowering battery costs can critically change a company's pricing strategy.

LG Energy Solution plans to launch production of a new battery chemistry, called lithium manganese-rich batteries, in the U.S. by 2028 in partnership with General Motors. The company has not yet announced a production location for that type of battery.

The new “prismatic” battery cell, meaning it is stored in a more efficient rectangular shape instead of a pouch, makes them easier to integrate into cell packs. GM said this type of battery performs at a 33% higher energy density than the best-performing lithium-iron-phosphate-based cell that is currently the industry standard.

LG Energy Solution now wholly owns and operates two battery facilities in the state of Michigan. The Holland location has produced batteries since 2012. LG Energy Solution also operates offices out of Troy for sales and R&D investigating future battery chemistries and formats, Lee said.

LG Energy Solution fully acquired the battery cell manufacturing facility in Lansing on May 8 from Ultium Cells LLC, its joint venture with GM.

The company has a total of eight manufacturing facilities operating or under construction in the U.S. Half operate through joint ventures: the Ultium Cells sites with GM in Warren, Ohio and Spring Hill, Tennessee; a Honda joint venture in Jeffersonwille, Ohio; and a Hyundai Motor Co. in Savannah, Georgia.

Jackie Charniga covers General Motors for the Free Press. Reach her [email protected].