LG Chem signs 7 trillion won battery deals with Volkswagen

LG Chem signs 7 trillion won battery deals with Volkswagen. June. 13, 2017 07:15. by Dong-Il Seo dong@donga.com.

LG Chem has agreed to supply electric-vehicle batteries to Volkswagen. The 7 trillion won worth contract is the largest deal to supply battery cells between the company and a sole provider.

According to the report of the Dong-A Ilbo on Monday, LG Chem signed a massive battery contract with Volkswagen for its Modular Electric Drive (MEB) project, replacing China’s CATL, the last competitor.

Volkswagen unveiled its MEB project and announced to switch to electric vehicle (EV) by 100 percent at the Paris Motor Show in last October. The German auto company plans to release 30 types of EVs by 2025.

For LG Chem, this contract is meaningful in that the company gains access to the entire platforms of EVs of Volkswagen. The body frame of the battery package is isolated in the MEB project, which means that the frame is manufactured first based on battery package and the body is covered later depending on model types. Although the initial contract is worth 7 trillion won, there is a high chance of signing additional deals if the project is successful.

Based on the shipping volume of last year, four Chinese companies such as BYD and CATL were included as the world’s top five EV battery producers and LG Chem ranked sixth on the list. “The fact reveals that the technology of LG Chem is well recognized, comparing to the price competitiveness of Chinese firms," a domestic market insider said.