en.Wedoany.com Reported - LG Energy Solution and Honda's joint venture battery factory in the US has commenced operations. Due to the stagnation of the local electric vehicle market, the factory is currently pivoting to mass-produce batteries for energy storage systems (ESS) instead of the originally planned electric vehicle batteries.

L-H Battery Company, the US joint venture of the two companies, announced on its official website on July 2 that it has begun mass production of lithium iron phosphate (LFP) batteries for ESS at its Jeffersonville, Fayette County, Ohio factory. Construction of the factory began in February 2023, and mass-produced products have been shipped after 3 years and 5 months.

These batteries are planned to be supplied to the US power grid, as well as commercial, industrial, and residential ESS through Vertech, LG Energy Solution's North American ESS business subsidiary. Initially, the factory was designed to produce electric vehicle batteries for Honda. However, due to a sharp decline in local electric vehicle sales following the US government's cancellation of electric vehicle subsidies in September last year, production direction shifted to prioritize ESS batteries.

Currently, the North American ESS market is growing rapidly, driven by the expansion of artificial intelligence (AI) data centers and the need for grid stability following the increased adoption of renewable energy. Depending on future market conditions, the factory will flexibly produce ESS batteries, as well as batteries for battery electric vehicles (BEVs) and hybrid electric vehicles (HEVs).

In December last year, the two companies decided to no longer co-own the factory building, with Honda deciding to take ownership. In May, LG Energy Solution sold the battery factory building to Honda's US subsidiary for 3.7 trillion won (approximately $2.46 billion). This move improved the company's capital management efficiency.

The factory, covering an area of 1.86 million square meters, equivalent to 260 football fields, was officially completed on the same day. Its annual battery production capacity is 40 gigawatt-hours (GWh), equivalent to the battery capacity for approximately 500,000 high-performance electric vehicles. Currently, there are over 1,000 employees, with plans to expand the total workforce to 2,200 in the future.

In 2023, LG Energy Solution became the first among South Korea's top three battery companies to begin producing globally mainstream ESS LFP batteries at its factory in Nanjing, China. In June last year, the company started mass production of ESS LFP batteries at its Holland, Michigan factory in the US. Among global major battery manufacturers, LG Energy Solution is the only company operating a large-scale ESS LFP battery mass production system within the US.

In November last year, the company began mass production of ESS LFP batteries at its independent factory in Windsor, Ontario, Canada. With the start of mass production at the Honda joint venture factory, LG Energy Solution's ESS battery production bases in North America have increased to three. The company plans to sequentially start ESS battery production lines at its independent factory in Lansing, Michigan, and two General Motors joint venture factories (in Warren, Ohio, and Spring Hill, Tennessee, USA), aiming to secure over 50 GWh of ESS battery production capacity across six bases in North America by the end of this year.

Since establishing its US ESS system integration (SI) subsidiary Vertech in 2023, LG Energy Solution has maximized efficiency through vertical integration of the overall ESS business, including ESS battery production, project planning, design, installation, maintenance, and software. The company has successively signed supply contracts with global customers such as Tesla, Terra-Gen, Excelsior Energy Capital, EG4, and Hanwha Qcells, expanding its order backlog. In May, the company signed a battery supply contract totaling 6 GWh with US integrated energy company DTE.