LG Chem secures $19B deal with GM linked to $3.2B Clarksville plant

Construction has just started on LG Chem’s EV battery materials plant in Clarksville, a project that stands as the biggest foreign investment in Tennessee history and the company responsible, for it has secured a contract.

LG Chem, a South Korea-based company has announced a $19 billion deal with General Motors Co. (NYSE; GM) that is set to span over 10 years.

The forthcoming factory in Clarksville, Middle Tennessee by LG Chem, which will cost around $3.2 billion will manufacture materials for electric vehicle batteries. The new contract with GM calls for enough battery materials to power 5 million vehicles capable of traveling over 300 miles on a single charge.

This investment by LG Chem marks the largest foreign investment in Tennessee history. The company anticipates hiring 860 employees over the years. Wages for these positions will begin at $24 per hour and around 200 jobs that pay $100,000 or more annually.

LG Chem’s Clarksville EV battery plant construction timeline

In December, JE Dunn Construction Co., leading a team effort officially broke ground on the project. It is expected that the plant will become fully operational by the end of 2025.

When the new LG Chem’s EV battery materials plant in Clarksville is at capacity, it will produce 60,000 tons of cathode materials, including processed nickel, cobalt, manganese, and aluminum. This accounts for around 40% of the cost of a battery cell as stated by GM.

Jeff Morrison, a GM vice president for purchasing and supply chain emphasized the significance of this collaboration with LG Chem taking place in Tennessee. He highlighted that it strengthens the supply chain during a critical time, for the industry.

A significant amount of the material is expected to be shipped to the battery plant owned by Ultium Cells LLC in Spring Hill, which is situated on GM’s standing vehicle manufacturing campus. The joint venture, between GM and another LG business, known as the Ultium plant will commence production this month. Currently employs over 900 individuals according to a spokesperson from the company.

According to CNBC’s observations, the duration of the contract suggests that GM remains committed to vehicles but is making adjustments to its plans in light of adoption than previously anticipated.

The new LG Chem’s EV battery materials plant in Clarksville will have a part to play in its plan to expand its battery materials business. It will produce NCMA cathode materials that include nickel, cobalt, manganese, and aluminum. These materials are aimed at enhancing the battery capacity and stability of next-generation EV batteries.

In mid-2022 LG Chem and GM announced that they had reached a binding agreement ensuring a supply of battery materials. LG Chem stated that the price announcement only covers a portion of the agreed volume specified in the 2022 framework.

Additionally, LG Chem will also be providing cathode materials, for Toyotas battery plant located in North Carolina.

The upcoming new LG Chem’s EV battery materials plant in Clarksville is not just biggest foreign investment in Tennessee history, it will be created with a focus, on the environment and the future requirements of energy. LG Chem is planning to work with power suppliers in Tennessee to meet the needs of customers, such as battery and electric vehicle manufacturers, who are seeking greater access, to renewable energy sources. The operation of this facility will solely depend on energy, specifically solar and hydroelectric power.