This time, ‘trillion 13’ exploded… LG Ensol, another ‘jackpot’ in a week

LG Energy Solution headquarters in Yeouido, Seoul. Photo = Hankyung DB LG Energy Solution received an order worth more than 13 trillion won for batteries for commercial vehicles from Ford, one of the Big 3 car manufacturers in the United States. On the 8th, a week after signing a contract with Mercedes-Benz to supply medium to large cylinder batteries worth trillions of won, the company hit the jackpot again. LG Energy Solutions is considered to be overcoming the electric vehicle slump (slow in temporary demand) by diversifying its portfolio into ternary batteries, lithium/iron phosphate (LFP) batteries, and system batteries energy storage (ESS).

○ Another big order received in just one week

LG Energy Solutions announced on the 15th that it had signed a contract with Ford to supply battery cells and modules with a total capacity of 109 gigawatt hours (GWh). LG Energy Solutions plans to produce NCMA (nickel, cobalt, manganese, aluminum) pouch-type batteries at its Polish factory and supply them to Ford. LG Energy Solutions previously signed a contract with Mercedes-Benz on the 8th to supply medium to large cylinder batteries worth 50.5GWh for 10 years.

This contract included two contracts to supply 75GWh over six years from 2027 to 2032 and 34GWh over five years from 2026 to 2030. New volumes were added to the volume from the Turkiye joint factory , which both companies had promoted but folded last year. LG Energy Solution has been able to increase the productivity of its Polish plant (annual production of 90GWh), whose operating level has fallen due to slower sales of electric vehicles in Europe. The plant’s operating rate, estimated at 60%, was holding back LG Energy Solution’s performance. The company plans to increase production efficiency by diversifying its Polish factory production lines to those for ESS and LFP.

The company did not disclose the amount of the order, but the business expects to generate sales of more than 13 trillion won. This is the value multiplied by the battery cell price ($89 per kWh) quoted by Bloomberg New Energy Finance (BNEF). It is reported that the amount of the order has not been disclosed, as the price of cell delivery may change depending on the price fluctuations of raw materials and market conditions. Kim Dong-myeong, CEO of LG Energy Solutions, said, “We will consolidate our leading position in the European market by using local production capabilities. “

○ Stand out in the electric commercial vehicle market

It is reported that all the batteries produced by LG Energy Solutions will be installed in the ‘E-Transit‘, an electric van sold by Ford in Europe. Each E-Transit requires an 84 kWh battery, which, if measured according to the total supply (109 GWh), can be taken to approximately 1.22 million units.

According to market research firm Marklines, 6,175 units of the E-Transit were sold last year. This year, 2,537 units were sold between January and August, which was worse than the previous year. This is because European countries have reduced subsidies for the sale of electric vehicles.

However, everyone agrees that the electric vehicle market will grow in the long term. According to LMC Automotive, an automotive research company, more than half of commercial vehicles in Europe are expected to be electric vehicles by 2030. Ford plans to actively target electric commercial vehicles in Europe based on a major contract with LG Energy Solutions . An industry official said, “The Transit’s internal combustion engine model is so popular that it has been the number one seller in the light commercial vehicle (LCV) market for consecutive years since 2018 to 2023,” and added, “The demand for E-Transit will also increase.”

Commercial electric vehicles carry more batteries per vehicle than passenger electric vehicles. Due to the nature of commercial vehicles, the average driving distance is long, and they are often driven in snowy or rainy weather. This is why car manufacturers put good quality batteries in commercial vehicles.

An official from LG Energy Solutions said, “Batteries for commercial electric vehicles have a higher unit delivery price and longer contract periods than those for passenger vehicles, so they are very profitable.”

Reporters Kim Hyeong-gyu/Kim Woo-seop/Kim Jin-won khk@hankyung.com