LG Energy (LGES), the world’s second largest electric car battery maker, had announced in March this year that it would spend $1.31 billion to build a new battery plant in the U.S. state of Arizona. Now, LG Energy says it will reconsider the plan because inflation has led to a big increase in the cost of building the plant.
LG Energy is re-evaluating the timing, size and other details of the investment due to a significant increase in investment costs caused by a deteriorating business environment, an official from LG Energy said.
The company said the plan has been put on hold because the investment in the new plant has ballooned to about $1.6 billion from the previous $1.31 billion, raising the cost of building the plant by nearly $300 million due to global inflation and the recent sharp devaluation of the Korean currency.
It will now take LG Energy at least 4-6 months to complete its assessment of the plant plan. In the meantime, LG Energy said the other two plants it is building with General Motors Co (GM) in Tennessee and Michigan will go ahead as planned.
LG Energy plans to further boost LG Energy’s position in North America by building a new plant in the U.S. state of Arizona because of rising demand for cylindrical batteries used in electric vehicles and other power tools, Yonhap said. If the plant is completed, it will be the first cylindrical battery plant operated by a South Korean battery maker.
LG Energy currently operates a wholly-owned plant in Michigan and another in Ohio with General Motors (GM), IT House has learned.