SOUTH KOREA, LG Energy, a lithium-ion battery cell manufacturing company whose customers include Tesla and GM, has secured two partnerships this week. Partnerships with battery manufacturing companies Proterra (NYSE: PTRA) and Romeo Power (NYSE: RMO). With recent supply chain issues, LG Energy is finalizing deals and positioning itself for both success and longevity in the EV space. While both ProTerra and Romeo Power are guarantying their own supply with almost identical agreements, the world's second largest lithium supplier and a German-Australian company could be the big winner from this deal.
Proterra & LG Energy
August 11, 2021 - LG Energy has negotiated a contract to supply their battery cells to Proterra until 2028. LG Energy's battery cells will be produced in the United States, which further complies with the United States-Mexico-Canada Agreement (USMCA) regulations that state that North American automotive manufactures must certify that 75% of the components are built in the region. The current administration's infrastructure bill focuses on US made, putting the US industry leader, Proterra, in the driver's seat. The deal between Proterra and LG Energy is a low-nine-figure dollar sum agreement. Exact numbers have not been released.
Romeo Power & LG Energy
August 13, 2021 - Romeo Power and LG Energy reach an agreement until 2028. Similarly to the Proterra deal mentioned above, LG Energy will supply their battery cells to Romeo Power. The difference, is in the numbers. Romeo Power have ordered enough battery cells equivalent to 29,000 battery packs for electric vehicles. Unlike Proterra's dedication to US made components, Romeo Power will invest $65M in an addition assembly line in LG Energy's Korea manufacturing plant.
Lithium Supplier - SQM
December 22, 2020 - Sociedad Quimica y Minera de Chile (NYSE: SQM) announced a new deal to supply LG Energy with approximately 55,000 tons of lithium carbonate through 2029. The world's second largest lithium suppliers, SQM, will boost production at the end of 2021 to meet the rising EV demand. With an expected shortage for minerals such as lithium, as well as battery cells and battery packs, SQM and LG Energy are creating a more sustainable future.
Lithium Supplier - Vulcan Energy Resources
July 19, 2021 - The German-Australian company, Vulcan Energy Resources' (OTC:VULNF) will supply LG Energy up to 10,000 tons annually of lithium from Germany until 2026. Vulcan also signed an agreement with Stellantis (NYSE: STLA) in July 2021, and is in talks with Daimler. Vulcan's zero-carbon energy lithium is produced using geothermal technology might be worth the investment alone.
Editor in Chief Statement
The EV supply chain requires a global effort. As seen from the partnerships mentioned above, the lithium comes from Chile and/or Germany, battery cells are then manufactured in South Korea, and those cells are then imported to the United States and assembled into battery packs. This global collaboration, will ensure the transition towards an electric society. An EV portfolio needs to diversified across the ecosystem as well as location. The aforementioned companies, are an investment in Germany, South Korea, Chile and the United States.
Alan Dowden
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