LG Chem Ltd of South Korea announced a collaboration with China's Huayou Group's subsidiary Youshan to develop a joint electric vehicle (EV) battery material production in Morocco in an effort to broaden its portfolio. The factory, which is expected to open in 2026, will generate 50,000 metric tonnes of lithium-phosphate-iron (LFP) cathode materials each year, enough to power 500,000 entry-level EVs, according to the South Korean chemical maker.
LG Chem, known for manufacturing more expensive nickel-cobalt-manganese (NCM) cathodes, is entering the LFP cathode business for the first time to meet the growing demand for cheaper LFP batteries as the auto industry steps up efforts to produce more affordable EVs, whose most expensive components are the batteries. LG Chem said LFP cathodes produced at the Morocco plant will be supplied to the North American market and receive subsidies from the U.S. Inflation Reduction Act (IRA) as Morocco is a free-trade partner with the United States, as per reuters.
The IRA is intended to wean the United States off the Chinese EV supply chain. To qualify for a $3,750 tax credit per car, at least 40% of the value of essential minerals used in an auto battery must be obtained from the United States or a free trade partner. South Korea and the United States have a free trade agreement.
LG Chem and Youshan would have to change their respective equity stakes in order to comply with the US Treasury Department's rule of a "foreign entity of concern," a measure intended against China, according to the statement. Safety is one of the top three things that purchasers want: Tata Nexon will fuel segment growth.