LG Chem on the Move

LG affiliate nails down contract with Eaton to supply lithium-ion batteries to largest U.S. auto parts maker

LG Chem Co. signed an agreement to supply its lithium ion batteries to Eaton, the largest U.S. car parts maker, from November this year, the company announced officially on Jan. 5.
The company already has an agreement to supply its car battery to General Motors from the first half of this year to power the Volt, a hybrid car that GM’s Chevrolet division developed and will market, along with a number of car makers in Europe. Winning the right to supply its lithium-ion battery to Eaton is a sign that LG Chem is on the verge of widening its overseas market for the battery.
The LG Group affiliate has already supplied the batteries to Hyundai Motor and Kia Motors to power their hybrid cars, the Avante and the Forte, last year and will supply them to GM., Eaton and CT&T of Korea this year, the company said.
The company may also be able to supply the lithium-ion batteries to a company in Europe and the United States each this year. Industry sources speculate the company may land Ford, Volkswagen and/or Renault as major customers.
LG Chem officials said they are under negotiations to sign contracts with commercial vehicle makers in the U.S., Europe, China and Japan. The company expects it will ring up around 1 trillion won in total sales this year.
The company signed a four-year supply contract with Eaton, which controls more than 90 percent of parts for hybrid commercial cars and it plans to expand its operation to plug-in hybrid commercial vehicles.
They said traditionally the real supply of goods begins from two to three years from the contract signing, but with Eaton, the company is set to supply the batteries from November and has already recorded it as sales on the ledger.
As such, the company’s deal with Eaton will pave the way for the company to supply its batteries to commercial vehicle makers. The contract with Eaton will have the company supply packs including battery cells and its battery manipulation system, they said. The company plans to have its Ochang plant able to produce battery cells to be shipped to the company’s U.S. subsidiary, CPI, so that they can be made into packs at its U.S. plant before being delivered to Eaton.
Eaton, on the other hand, will attach them to commercial vehicles’ power train systems before they become part of complete commercial vehicles. Eaton plans to expand its supply of power train systems to other large commercial vehicle makers such as Navistar, Peterbilt, Kenworth and Iveco, among others.
Vice Chairman Kim Ban-seok said LG Chem will push the sales of its lithium-ion batteries all over the world to makers of hybrid sedans and commercial vehicles. He said the company will also develop and market large-capacity lithium batteries for industrial uses aiming to be a leader in the global market.
The company first supplied its batteries for hybrid cars to Hyundai and Kia in December 2007 and later to the Avante and Forte in the same year. In January 2009, GM chose the company to supply batteries to power the hybrid sedan, Volt.
In October 2009, the company entered the lithium battery market for suburban electric cars, and this year the company expects to supply its batteries to Ford, Volkswagen and/or Renault, depending on the outcome of current talks with those car makers, the company said. nw

LG Chem Vice Chairman Kim Ban-seok