• LG Chem on Tuesday established itself as an independent battery producer
  • The company is one of the main suppliers for Tesla’s Model 3 and Model Y
  • LG Chem set a goal of generating around $27 million in sales by 2024

South Korea’s LG Chem said Tuesday it is now an independent battery producer, setting its sights on global dominance through a regional partnership with Tesla.

In the announcement, President Kim Jong-hyun said the battery cell segment has gone from a “practically nonexistent” component to one of the pioneers in supporting the emerging electric-vehicle business.

“We have now successfully spun off the company to reach for higher dreams and have now set out on a great voyage,” he said in a statement.

Spinning off its battery unit as an independent company, LG Chem will be making a splash in the Chinese auto sector by doubling its capacity to meet regional demand from Tesla, Reuters reported in an exclusive on Tuesday.

LG Chem’s work with Tesla could outcompete CATL, one of the other suppliers for Tesla’s Model 3 sedan. CATL, a Chinese manufacturer of lithium-ion batteries, teamed up with Mercedes-Benz in August to support the carmakers' ambitions of carbon neutrality.

Kim’s ambitions are already off to a head start, with Reuters reporting that LG Chem is adding production lines to keep up with demand from Tesla, its main customer.

“Tesla simply doesn’t have enough battery cells,” a source said on condition of anonymity because the plans were supposed to be confidential. “So LG Chem is going to more than double China output.”

Reuters noted that LG Chem is already one of the top battery suppliers for the Model 3 built in Shanghai with an annual production capacity of around 250,000 vehicles. Its electric Model Y sport-utility vehicle will start production next year and could reach 250,000 units by 2022.

Tesla only secured permission from the Chinese government on Monday to start selling the Model Y models in the country. The vehicle maker also announced plans to produce electric-vehicle chargers in China next year, representing a $6.4 million investment in the country.

LG Chem said it expects to see revenue of 13 trillion KRW (approximately $11.7 million USD) this year and set a goal of generating 30 trillion KRW ($27 million USD) in sales by 2024.

“The achievements that we have made so far are greater than you think, and I ask that you believe in this power and confidently open the doors to the future,” the company’s president said.

China is the main growth driver for many carmakers, in particular Tesla
China is the main growth driver for many carmakers, in particular Tesla. AFP / SAUL LOEB