Toyota Motor Corporation (NYSE:TM) has entered into a significant battery supply agreement with LG Energy Solution, solidifying their collaboration in the electric vehicle (EV) space. Under this agreement, Toyota will source lithium-ion battery modules from LG to power its battery electric vehicles (BEVs) that are scheduled for assembly in the United States.
Starting from 2025, LG Energy Solution will provide Toyota with 20 gigawatt-hours (GWh) of battery modules annually. This substantial supply will be adequate to support the production of 250,000 electric vehicles per year.
The battery modules supplied as part of this agreement will consist of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells, which are essential for the efficient functioning of modern EVs.
LG Energy Solution plans to invest $3 billion in its Holland, Michigan, plant to establish dedicated battery production lines exclusively for Toyota. These production lines will enhance the supply of battery modules to Toyota’s Kentucky plant, where the modules will be assembled into battery packs for use in electric vehicles across the United States.
In a previous announcement made in May, Toyota revealed its plans to manufacture its first electric vehicle assembled in the United States at its Kentucky plant by 2025. This electric vehicle is one of the ten EVs slated for global launch by Toyota by 2026.
Tetsuo Ogawa, the president and CEO of Toyota Motor North America, emphasized the significance of this battery supply agreement in meeting Toyota’s manufacturing and carbon reduction objectives.
For Toyota, the proportion of electrified vehicles sold in fiscal year 2023 was 29.6% of total sales. The company anticipates that this ratio will rise to 37% in fiscal year 2024.
Toyota, headquartered in Japan, has ambitious targets for its electric vehicle segment. It aims to generate 40% of its global sales from EVs by 2025 and increase this figure to 70% by 2030. To achieve these goals, the company plans to invest 4 trillion yen (equivalent to $35 billion) in developing a lineup of 30 battery electric vehicles by 2030. Toyota also intends to expand its global sales of battery electric vehicles to 3.5 million units per year by 2030.
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