SEOUL (BLOOMBERG) – LG Energy Solution, the world’s second-largest electric car batterymaker, is reviewing plans to build a 1.7 trillion won (S$1.8 billion) plant in Arizona as surging material prices inflate the costs of the project.
Given “unprecedented economic conditions and investment circumstances” in the United States, LG Energy is currently evaluating various investment options, the company said in response to a Chosun Ilbo report that it had decided to reconsider the project as construction cost has increased and amid concerns over weakening battery demand.
LG Energy had planned to spend 1.7 trillion won to build a plant with 11 gigawatt hours of capacity in Queen Creek, Arizona, to supply cylinder-type batteries for electric vehicle start-ups. Construction was set to start in the second quarter with mass production scheduled for the second half of 2024, LG Energy had announced in March.
A final decision on whether to build the Arizona plant will be made after LG Energy consults with customers on how it can reflect cost increases in battery prices, Yonhap News Agency reported, citing an unidentified source.
The decision is expected to take at least one to two months, according to Yonhap. The company still plans to proceed with plants jointly owned with General Motors in Tennessee and Michigan, Yonhap said.