The Swedish carmaker decides to produce electric vehicles only after this year, the next-generation Volvo and Polestar models to be powered by lithium batteries

LG Chem said May 15 it had signed a long-term supply contract with Volvo Cars for electric vehicle batteries, as the Swedish carmaker needs those batteries for its electric cars that it has developed and will continue to develop in the future.

The Korean firm was selected to supply car batteries along with Chinese battery manufacturer Contemporary Amperex Technology., the chemical company said.

While the two companies did not elaborate on the details of the financial deal and supply amount, LG Chem said the agreement will allow it to deliver lithium-ion batteries for Volvo’s next-generation electric vehicles.

Under the deal, LG Chem will supply lithium-ion batteries over the coming decade for next-generation Volvo and Polestar models.

The company projected that it will be able to supply around 10 trillion won worth of the lithium batteries under the contract based on the fact that the electric vehicles are produced on the exclusive platforms on the contracts longer than five years and Volvo has decided to produce electric vehicles only from this year.

In 2017, Volvo Car Group announced a plan to transform itself into an EV maker, saying, “Every new Volvo car launched from 2019 onwards will be powered by electricity.” The Swedish carmaker also said EVs will make up 50 percent of its total sales by the end of 2025. Since the announcement of the plan, eyes have been on which companies will be selected as EV battery suppliers for the project.

Commenting on the multi-billion dollar battery supply deal, Volvo said LG Chem is a renowned battery manufacturer that has a long and successful track record of supplying lithium-ion batteries to the global automotive industry.

The Korean battery maker's technology, supply chains and competitive costs met Volvo Cars' strict sourcing guidelines, it said.
LG Chem said taking the latest contract as an opportunity, it will enhance its cooperation with Volvo Car Group and solidify its leading position in the EV battery area.

As an increasing number of global carmakers are moving to develop future EVs through their own module platforms, LG Chem will be able to win further EV battery deals, the firm said.

LG Chem’s backlog of the lithium batteries amounts to 110 trillion won and expects more huge orders down the road as the projects that need lithium batteries grow in scale and turned into platforms. The company expects to sell 5 trillion won worth of the lithium batteries this year and 10 trillion won next year, doubled the amount in the preceding year. The annual sales are likely to take off further from 2020 when the third generation electric cars are produced.

President Kim Jong-hyun in charge of LG Chem’s Battery Business Headquarters, said the company won the contract this time due to its extended R&D activities on lithium batteries for the past 30 years and continuous investment in the area. He went on to remark that the company will consolidate its position as a lithium battery maker, leading the market with an absolute competitive edge over its rivals.

Having continued to grow over 7 decades since founded in 1947, LG Chem is literally the company leading the chemical industry in Korea.

The company has built the global network for production, sales and R&D not only in Korea but also in main bases across the world and has provided globally competitive products including ABS, polarizers and EV battery cells, raising its global position as a material supplier.

A number of research staff at work at LG Chem’s Lab in Ochang, North Chungcheong Province. (Photos: LG Chem)