Federal Highway Administration Build America, Buy America: Toyota Goes Whole Hog Into BEV Signs USA Supply Deal With LG Batteries

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• Two global leaders join forces to drive the future growth of battery electric vehicles in the U.S.
• LG Energy Solution to supply Toyota with 20GWh of high-nickel NCMA battery modules annually from 2025.
• Modules produced in LG Energy Solution’s Michigan facility to be used to power a new BEV model assembled in North America, at Toyota Motor Manufacturing Kentucky, among others.

Editor's Note...and a US plant will qualify their vehicles for Green New Deal Welfare.

SEOUL, Korea and PLANO, Texas (Oct. 4, 2023) – LG Energy Solution (KRX: 373220) and Toyota Motor North America, Inc. (Toyota) today announced that they have signed a supply agreement for lithium-ion battery modules to be used in Toyota battery electric vehicles (BEVs) that will be assembled in the United States.

Under the contract, LG Energy Solution will supply automotive battery modules at an annual capacity of 20GWh starting from 2025. The battery modules, consisting of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells, will be manufactured in LG Energy Solution’s Michigan facility.

The innovative power solutions will support Toyota’s expanding line of BEVs, part of its multi-pathway product strategy, including a new BEV model that will be assembled at Toyota Motor Manufacturing Kentucky in 2025. They will also help further Toyota’s vehicle electrification initiatives, as it aspires to offer 30 BEV models globally across its Toyota and Lexus brand nameplates and produce up to 3.5 million BEVs annually by 2030.

“At Toyota, our goal is to reduce carbon emissions as much as possible, as fast as possible,” said Tetsuo “Ted” Ogawa, president and CEO of Toyota Motor North America. “Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-pathway approach and growth plans for BEVs in North America is critical to achieve our manufacturing and carbon reduction plans. Working with LG Energy Solution, we are excited to be able to offer products that will provide the performance and quality our customers expect.”   

To fulfill the supply agreement, LG Energy Solution will invest KRW 4 trillion (approximately USD 3 billion) in its Michigan facility to establish new production lines for battery cells and modules exclusively for Toyota, with completion slated for 2025. Initially, the battery modules will go to Toyota Motor Manufacturing Kentucky to be assembled into battery packs and equipped onto BEVs.

The agreement brings together LG Energy Solution’s proven capabilities in manufacturing top quality battery cells and modules at scale, and Toyota’s advanced technologies in battery packs to create a product using LG Energy Solution’s innovative power solution which optimizes battery system performance, providing peace of mind and further enhancing the BEV customer experience. LG Energy Solution continues to enhance battery safety, including with respect to its thermal management for its high-nickel NCMA batteries.

“We’re excited to have Toyota, the best-selling global automaker, as our new customer.  With our 30 years of experience in lithium-ion batteries, we will provide innovative power solutions to support Toyota’s push further into battery electric vehicles,” said Youngsoo Kwon, CEO of LG Energy Solution. “The agreement also presents another big opportunity for us to strengthen our production capacity in North America, thereby bringing more real-life, large-scale progress toward electrification in the region.”

The landmark deal represents LG Energy Solution’s largest single supply agreement secured outside of joint venture agreements. The company now supplies its batteries to all top five global automakers[1]. Based on its market leadership, the company has eight battery manufacturing facilities currently operating or under construction in North America, and continues to expand both its production network and supply chain in the region.

[1] Based on 2022 market sales

About LG Energy Solution

LG Energy Solution (KRX: 373220), a split-off from LG Chem, is a leading global manufacturer of lithium-ion batteries for electric vehicles, mobility, IT, and energy storage systems. With 30 years of experience in revolutionary battery technology and extensive research and development (R&D), the company is the top battery-related patent holder in the world with over 25,000 patents. Its robust global network, which spans North America, Europe, Asia, and Australia, includes battery manufacturing facilities established through joint ventures with major automakers such as General Motors, Stellantis N.V., Hyundai Motor Group, and Honda Motor Co. Ltd. At the forefront of green business and sustainability, LG Energy Solution aims to achieve carbon neutral operations by 2050, while embodying the value of shared growth and promoting diverse and inclusive corporate culture. To learn more about LG Energy Solution’s ideas and innovations, visit https://www.lgensol.com.

Build America, Buy America Act (BABA) In-Context

The Federal Highway Administration (FHWA) is responsible for implementing the Build America , Buy America Act (BABA). This act aims to promote the use of American-made products in federally funded transportation projects, including highways, bridges, and other infrastructure.

The BABA requires that certain iron, steel, and manufactured products used in these projects be produced in the United States. This requirement helps support American manufacturing and job creation. The act also includes provisions for waivers and exceptions in certain cases where American-made products are not available or would be significantly more expensive.

The FHWA has published several notices and implementation plans related to the Build America, Buy America Act. These documents provide guidance and information on how the act is being implemented and how stakeholders can comply with its requirements.

The Biden-Harris Administration has taken steps to advance the goals of the Build America, Buy America Act, including publishing minimum standards for federally funded electric vehicle (EV) infrastructure and finalizing the implementation plan for EV charging equipment

The administration has also announced funding opportunities for cities, towns, tribes, and states to deploy EV charging infrastructure.

Overall the Build America, Buy America Act is an important policy that aims to support American manufacturing and promote the use of American-made products in transportation projects. The FHWA plays a key role in implementing and enforcing the requirements of the act.