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LG Energy to supply EV batteries to Rivian in $6.7 bn deal

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The Rivian R2 electric SUV to be equipped with LG Energy’s batteries (File photo downloaded from Rivian’s website)

LG Energy Solution Ltd., the world’s third-largest battery maker, is set to supply cells to Rivian Automotive Inc., a US electric vehicle manufacturer in a deal estimated at $6.7 billion, adding to hopes for the South Korean company’s recovery through customer diversification amid the prolonged slowdown in the clean automobile market.

LG Energy said on Friday that its Arizona unit signed a deal with Rivian to provide cylindrical batteries of 67 gigawatt-hours (GWh) for five years. The batteries of 46 millimeters (mm) in diameter and 95 mm in length will be installed in the Rivian R2 sport utility vehicle to debut in 2026, according to the leading South Korean battery producer.

The deal’s value was estimated at $6.7 billion on assumption of a battery price of $100 per kilowatt-hour, industry sources in Seoul said, although LG and Rivian have yet to disclose financial terms.

“We have inked a number of major supply deals with the next-generation 46-series cylindrical battery, accelerating the diversification of products and customers,” LG Energy said in a statement.

46 MM DIAMETER BATTERIES

The deal is expected to help LG Energy expand its presence in the high-performance battery market, industry sources in Seoul said.

The 46 mm diameter cylindrical battery is being heralded as a game-changer in the battery industry as it is known to increase energy density by five times and output by six times compared to the conventional 2170 type, which measures 21 mm in diameter and 70 mm in length.

LG Energy said the batteries for Rivian consist of nickel-rich nickel cobalt manganese aluminum (NCMA) materials to maximize energy density and secure safety.

California-based Rivian was the most satisfying US auto brand, according to the 2024 JD Power US Automotive Performance, Execution, and Layout (APEAL) study. The R2 has gained its popularity even before its launch with its pre-orders topping 100,000.

A bird’s-eye view of LG Energy’s battery plant in Queen Creek, Arizona (File photo by LG Energy)

MADE IN ARIZONA

LG Energy plans to manufacture the batteries for Rivian at its Arizona plant, the company’s first facility dedicated to cylindrical batteries.

The factory under construction is scheduled to start commercial operations in 2026 with a plan to produce batteries of 46 mm diameter, according to the company.

The plant is also set to supply 50.5 GWh of cylindrical batteries of 46 mm diameter to Mercedes-Benz AG in North America.

LG Energy, the supplier to world’s No. 2 EV manufacturer Tesla Inc., has been actively securing deals with other automakers.

Last month, the unit of South Korea’s fourth-largest conglomerate LG Group, inked deals estimated at $9.5 billion to supply battery cells and modules to US Ford Motor Co. in Europe.

LG Energy in July clinched a multi-billion-dollar deal to supply lithium iron phosphate (LFP) batteries for low-end electric vehicles to Renault Group’s EV unit Ampere.

By Hyung-Kyu Kim

khk@hankyung.com

 
Jongwoo Cheon edited this article.

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