LG will build a new battery factory in Nanjing and expect to achieve full production in 2023

LG Chem plans to build a second power battery factory in China. Recently, Nanjing Jiangning Binjiang Development Zone held a signing ceremony with LG Chem. LG Chem plans to start construction of a power battery project in Binjiang Development Zone in October this year. The total investment of the project is about 2 billion US dollars. It will be completed and put into operation in October 2019, and the annual production capacity will reach 32GWh in 2023.

Battery manufacturer South Korea's LG Chem maintains an average annual sales growth of more than 30% in the world, especially in automotive power batteries and ESS energy storage batteries. The battery project, which is scheduled to start in Nanjing in October this year, mainly produces power batteries, energy storage batteries and small batteries. The factory plans to build 23 electrode and battery production lines, including 16 power batteries, 3 energy storage batteries and 4 small batteries.

The project will begin mass production in October 2019 and achieve full production in 2023. After the project is put into production, the annual production capacity can reach 32GWh, and the annual output value will reach 35 billion Yuan. Its power battery products mainly supply well-known automobile manufacturers such as Hyundai Motor, Volvo, GM, Chrysler, Renault, etc. With the increase of new orders from China's domestic and international vehicle brands, LG will continue to expand its investment scale and production capacity. The ultimate goal is to meet the needs of 500,000 electric vehicles, such as the 60 kW-h battery pack of the Chevrolet Bolt and Tesla ModelS.

It is understood that as early as the end of 2015, LG Chem had completed the construction of a power battery factory in Qixia District, Nanjing. According to the capacity planning at that time, LG Chem plans to supply 50,000 electric vehicles worldwide in 2016. By 2020, the production capacity will be expanded to 200,000 electric vehicles. LG Chem has said that the Nanjing plant is the world's third largest power battery plant after the South Korea's Kamakura plant and the Holland plant, and will be the world's most important power battery production base for LG Chem.

However, the grand vision of LG Chem was quickly shattered. At the beginning of 2016, China's new energy vehicle subsidy policy was adjusted, and subsidies tried to be linked to the power battery catalog. Although this requirement is not officially stated, it has been considered by the industry to be a “hidden rule” for subsidies. Unfortunately, LG Chem has not been able to enter the power battery catalog. Regarding LG Chemical, Samsung SDI and other Korean-owned battery companies have not been able to enter the power battery catalogue. The management department and the company have different opinions. The management department emphasizes that these enterprises have failed to meet the standards, and the enterprises say that they do not know why they cannot enter the catalog. Therefore, policy fluctuations at the beginning of 2016 were interpreted by the industry as “the government’s protection of local power battery companies”.

Under the slogan of the policy, the LG Chemical Nanjing plant was in trouble. According to media reports, in April 2017, LG Chem and Geely Group reached an agreement, Geely Group wholly acquired the right to use all the production equipment and manufacturing technology intellectual property rights of the LG Nanjing factory. Subsequently, Geely Group demolished the production equipment of the plant to its Hengyuan battery base in Jinhua, Zhejiang.

LG Chem has never given a positive response to the news that the Nanjing plant was sold to Geely. But the fact that LG Chem plans to build another power battery factory in Nanjing may prove indirectly that LG Chem has lost its previous Nanjing plant.

It is worth noting that before the announcement of Nanjing's re-establishment of the plant, LG Chem also selected a joint venture with Huayou Cobalt to build a ternary precursor new material project, followed by the China Association of Automobile Manufacturers, Guolian Automotive power battery Research Institute. The company cooperates in the research of a new generation of power battery technology.

Editor's comment: Japan and South Korea's power battery companies have always been considered the biggest threat to China's power battery companies, and the white list has given the foundation of Japan and South Korea's power battery companies to build factories in China, although Japan and South Korea's battery factories cannot appear in the subsidy catalogue. In the big list, however, the subsidies for power batteries are gradually decreasing year by year. When the subsidies are officially cancelled, perhaps the crisis of domestic power batteries will come formally. Finally, it's up to the market.

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