Did you know that LG Chem operates a huge (and growing) battery manufacturing plant in Holland, Michigan? If you didn’t, you’re not alone. According to Automotive News, market research firm Navigant estimates the LG Chem factory could account for as much as one quarter of North America’s total EV battery capacity by 2017.
The Holland facility is manufacturing 650 megawatt-hours of battery cells annually at the present time, but Navigant sees that rising to 3 gigawatt-hours within a few years. It has three production lines, two of which are operating 24 hours a day, and it is building a fourth line for an as yet unnamed new customer. Presently, LG Chem is building batteries for the Chevy Volt and Spark EV and will also supply batteries for Cadillac’s new CT6 plug-in hybrid. It has also signed a contract with Tesla Motors to supply an updated battery pack for the Tesla Roadster.
Nick Kassanos, president of LG Chem Michigan, says the Holland facility generates just two defects per million battery cells.”There is room to expand without adding brick and mortar,” he adds. Because of its scalable production system, LG Chem can expand without the risk that costly equipment will be underused. “That equipment is very expensive, but they can put in exactly as much capacity as they need,” said Sam Abuelsamid, a Detroit-based researcher for Navigant. “They don’t have equipment sitting idle.”
But what of the GigaFactory that Tesla is building outside of Reno, Nevada? Tesla says it will eventually have enough capacity to make produce 50 gigawatt-hours of batteries a year — enough for 500,000 cars. Won’t it be the largest battery factory by far? Maybe. Before Tesla needs batteries for half a million cars, it must first sell a half million cars. To do that, it will need more stores, more service centers and more SuperCharger locations. Its GigaFactory may be designed to make that many batteries, but it will be many years before it reaches its finished size and is capable of cranking out that many.
LG Chem is being very aggressive about expanding its business. Carlos Ghosn, CEO of Nissan, said last year he would be open to buying batteries from them. The most important factor driving the battery business going forward will be cost reductions derived from economies of scale. Mark Reuss, GM’s global products chief, says, “Don’t underestimate scale. Scale matters a lot. It’s one of the big deficiencies in the EV business these days.”
In other words, bigger is better. And LG Chem is positioning itself to be one of the biggest battery manufacturers of all.