SEOUL -- The battery-making wing of South Korea's LG Group has signed a two-year contract worth 1.45 trillion won ($1.33 billion) to purchase secondary battery materials from a domestic partner. It marked the first major deal since LG Energy Solution was formally launched as an independent entity.
L&F said in a regulatory filing on December 16 that it would supply cathode materials for rechargeable batterie to LG Energy Solution's plants at home and abroad for two years from January 2021. L&F's key products include nickel manganese cobalt, lithium cobalt oxide and lithium manganese oxide.
LG Energy Solution spun off from LG Chem made its official debut as a separate entity on December 1. Before its split-off, the company was chosen as the sole battery supplier for Tesla's mid-size SUV Model Y to be produced in China. Tesla adopted cylindrical nickel, cobalt and manganese (NCM) batteries for Model Y.
LG Chemical has tried to produce a new type of efficient batteries with a longer life than conventional ones, such as NCM 811 that contains nickel, cobalt and manganese. The proportion of nickel is high so that battery producers can save costs and extend the driving range. Cobalt, an expensive rare-earth element, is vulnerable to sudden price fluctuations. An upgraded model called NCMA increases stability by adding aluminum.
Battery makers in South Korea, China and Japan have been locked in a fierce battle to expand their share in the market for electric vehicle batteries. To maintain their competitive edge in technology, South Korean companies have stepped up efforts to produce premium or third-generation batteries.
In February, LG Chem secured a deal to provide cylindrical lithium-ion cells to Lucid Motors, an American electric car maker, for the standard version of Lucid Air, a high-performance luxury to be unveiled this year. The long-term supply deal will help LG Chem secure all business portfolios in the electric vehicle market, which is bisected by large pouches and small cylindrical cells.
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