South Korean batteries giant LG Energy Solutions announced plans to increase investment in Arizona, USA battery facility to US$5.5Bn.  

LG Energy Solution announced that it would increase its investment in the proposed Arizona, USA battery facility to US$5.5Bn, roughly 4 times the initial US$1.4Bn investment assigned to the project when it was first announced. The Phoenix-based facility will have the capacity to produce cylindrical cells (2170) with a capacity of 27GWh and pouch cells with a total of 16GWh capacity. Cylindrical cells produced will be particularly targeted for end-users in the automotive industry, whilst pouch cells using LFP cathode materials will be targeted towards use in energy storage ESS applications. The cathode chemistry of cylindrical cells to be produced at the facility was not announced, though Project Blue expect these cells to use NCM or NCMA type cathode materials. First production from the facility is scheduled for 2025, in the form of cylindrical cells, with the first production of pouch cell types following in 2026.

The increase in investment follows a string of announcements by automotive and battery manufacturers in recent months. Ford Motors announced plans in February for a US$3.5Bn battery production facility in Michigan, manufacturing batteries for use in their electric vehicle ranges from 2026. Battery production facilities are also planned by GM in Ohio, Tennessee and Michigan states, while Honda announced in February 2023 their intention to construct a US$4.4Bn facility in Jeffersonville, Ohio in collaboration with LG Energy Solutions.             

Announcements by battery manufacturers to build-out additional capacity in the USA have undoubtedly been catalysed by the signing of the Inflation Reduction Act (IRA) by the US Government in August 2022. The IRA will look to re-shore a significant portion of North American battery and battery raw material production in the period to 2030, by providing tax credits if certain thresholds for sourcing feedstocks and components regionally are achieved. The incentives provided by the IRA and the large market opportunity within North America are expected to precipitate rapid growth in battery capacity in the USA, with a report posted by the US Department of Energy expecting US battery production capacity to exceed 1,000GWh by 2030, compared to just 85GWh in 2022.