Toyota Motor has recently agreed to redirect a $1.5bn order to LG Energy Solution (LGES) to support operations at the Ultium Cells battery cell plant in Lansing, Michigan in the US. This decision comes after General Motors (GM) withdrew from the project, leaving LGES in search of alternative customers.
In December 2024, GM announced its plans to sell its $1bn stake in the facility, which was initially intended to play a crucial role in the automaker’s electric vehicle expansion. As a result, the Japanese automaker, Toyota, will transfer its existing order from another LG plant in Michigan once LG fully acquires the Lansing site, a move expected to take place this spring.
LGES stated, “This is part of our strategic objective to further optimize our investments in North America and also respond to the needs from global automakers.” South Korean firms, including LG, have heavily invested in US-based EV battery plants, anticipating a rise in demand due to incentives under the Inflation Reduction Act.
However, automakers have been adjusting their EV strategies in response to slowing growth, and policymakers in the US have signaled potential changes to existing subsidies. The batteries that Toyota will purchase from LG are suitable for both electric and hybrid vehicles.
Moreover, LG is exploring opportunities to supply battery production from the Lansing plant to the stationary storage sector, where demand has been increasing due to the expansion of data centers supporting AI applications. Originally announced in early 2022, the Lansing plant was expected to be a key component of GM’s planned $35bn investment in EV, with a goal of launching 30 EV models by 2025 and creating 4,000 jobs.
However, shifting market conditions have led GM to scale back its EV ambitions. The project was granted $186m in various state and local incentives, and GM is now working with the Michigan Economic Development Corporation to transfer those incentives to LG.
In conclusion, the shift of the $1.5bn order from Toyota to LG’s Michigan battery plant marks a significant development in the EV industry, showcasing the dynamic nature of the market and the strategic decisions made by key players to adapt to changing circumstances.
