Summary
- Toyota is transferring a $1.5 billion battery order to an LG Energy Solution factory in Michigan
- The factory in Lansing was originally a joint venture between GM and LG, but GM backed out in December
- Toyota will transfer the order from another LG plant in Michigan once LG fully acquires the Lansing factory
- The factory was planned to cost $2.5 billion with both GM and LG splitting the amount
- Toyota plans to ramp up EV production to at least one million units globally by 2026, with an upcoming battery factory in North Carolina and a three-row SUV assembly in Kentucky getting delayed
Article
Toyota is planning to shift a $1.5 billion order to an LG Energy Solution battery factory in Michigan after General Motors pulled out of the project. The plant, located in Lansing, was initially a joint venture between GM and LG, but GM announced in December that it was selling its stake to the battery maker. As a result, LG had to find new customers to keep the factory operational.
Toyota has agreed to transfer an existing order from another LG plant in Michigan once LG completes the acquisition of the Lansing factory, which is expected to happen in the spring. The batteries purchased by Toyota through this deal could be used in hybrids or electric vehicles, and LG is also looking to secure some energy-storage business for the Lansing factory.
The factory was initially reported to cost $2.5 billion, with GM and LG splitting the cost. The project also received $480 million in government incentives, and GM is working with the State of Michigan and the Michigan Economic Development Corporation to ensure those incentives are fully transferred to LG.
In September of last year, Toyota announced plans to ramp up EV production to at least one million units globally by 2026. This target is lower than the 1.5-million-unit goal discussed previously by the automaker but still represents a significant increase from 2023 levels. In the U.S., Toyota is set to open its own battery factory in North Carolina to support future hybrid and EV production.
However, there have been reports indicating potential delays in the launch of key electric models in the U.S. market. An October 2024 report suggested that a new all-electric three-row SUV, slated for production in Kentucky, might be pushed back from 2025 to 2026. Additionally, plans to manufacture Lexus electric SUVs in the U.S. were reportedly canceled, with the vehicles continuing to be imported from Japan.
Overall, Toyota’s partnership with LG Energy Solution in the Michigan battery factory highlights the shifting landscape of the automotive industry towards electrification. As Toyota aims to increase its electric vehicle production globally, the collaboration with LG will play a crucial role in ensuring a stable supply of batteries for future hybrids and EVs. The reallocation of the $1.5 billion order signals a strategic move by Toyota to adapt to changing market dynamics and secure its position in the growing electric vehicle market.
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