President Kim Jong-hyun of LG Chem’s Energy Solution and An Conghui, President of Zhejiang Geely Holding Group, CEO and President of Geely Automobile Group, sign a deal on a joint venture between LG Chem and Geely Automobile Holdings at the company’s research institute in Ningbo, Zheijiang Province, China, on July 12.

 (Photos: LG Chem)

LG Chem Vice Chairman Shin Hak-cheol.

LG Chem has agreed to establish an EV battery joint venture with Geely Auto, China’s local No. 1 EV brand.

Among those on present at a ceremony to sign the deal on a joint venture between LG Chem and Geely Automobile Holdings at the company’s research institute in Ningbo, Zheijiang Province, China, on July 12 were President Kim Jong-hyun of LG

Chem’s Energy Solution and An Conghui, President of Zhejiang Geely Holding Group, CEO and President of Geely Automobile Group.

Under the deal, LG Chem and Geely Auto each will contribute 103.4 billion won in a 50:50 EV battery joint venture.

The site of an EV battery plant and the name of the incorporated body will be determined later.

The construction of the plant will start late this year and the plant will have a capacity of 10GWh by late 2021.

Starting in 2022, the EV batteries the joint venture will produce will be supplied to Geely’s electric vehicles.

The two companies’ establishment of the joint venture may be construed as Geely’s need to secure a stable supply of quality EV batteries, produced by LG Chem.

Geely Auto aims to have 90 percent of its auto sales replaced with EVs starting in 2020. Geely rose to China’s local No. 1 EV brand last year by selling 1.5 million EV cars in 2018.

LG had studied ways of collaborating with Chinese battery makers and automakers to tap the Chinese EV battery market. L

G Chem will be able to establish an EV battery joint venture with Geely Auto under the latest deal in which LG Chem will retain its own differentiation technology and secure a stable supply of EV batteries.

Under the joint-venture deal, LG Chem has gained a foothold to tap the Chinese EV battery market, which accounts for half of the global market.

In particular, now that China is expected to phase out subsidies in 2021 or after, LG Chem has secured a foundation to ensure a stable supply of EV batteries through the establishment of an EV battery joint venture with Geely Auto, China’s local No.1 automaker.

Of late, global automakers are scrambling to push for the establishment of joint ventures with EV battery makers to secure a stable supply of EV batteries as the global EV market has showed signs of rapid growth.

LG plans to aggressively ush for the establishment of joint ventures with other global automakers the way its own technology power and a stable supply of EV batteries can be secured.

“As global battery makers are scrambling to push for the establishment of joint ventures to enter the Chinese market, LG Chem has captured the advantageous position to tap China by securing partnerships with the Chinese local No. 1 automaker Geely Auto.”

President Kim of LG Chem’s Energy Solution said. LG Chem plans to aggressively explore the Chinese market through the joint venture and make efforts to contribute to the development of the Chinese EV industry, the world ‘s biggest market, he added.

Meanwhile, figure released by Mirae Asset Daewoo’s research center, showed that Chinese EV sales are predicted to jump to 1.5 million units in 2020, 3.5 million units in 2023 and 5.8 million units in 2025.