LG Energy Solution, SK On win hefty incentives in US, Hungary

LG Energy Solution and SK On, two Korean battery makers that are increasingly expanding their production base in key markets for electric vehicles, have recently won hefty incentives in the US and Europe, respectively.

On Tuesday, the state of Michigan approved a package of incentives worth about $600 million for LG Energy Solution, including $565 million in government subsidies and $132.6 million in tax cuts.

The incentives come after the battery maker announced a new investment of $1.7 billion to beef up the production capacity of its battery component plant in the city of Holland, nearby Grand Rapids.

The company aims to almost quintuple the plant’s capacity to some 40 gigawatt-hours in phases in the coming years.

The state government projected the company’s new investment would create 1,200 new jobs there, making it one of the largest employers in the city with a population of 33,000.

“Michigan was a natural choice to our commitment of building an impactful global business because of its rich pool of talent, being close to the geographic epicenter of the automotive industry and its strong support,” said Koo Bon-chul, president of LG Energy Solution Michigan.

Adding to its own production plant, LG Energy Solution and General Motors are building three battery plants in Michigan, Ohio and Tennessee as part of their joint venture partnership, with talks for a fourth plant underway.

In the meantime, the European Commission on Monday approved Hungary’s planned support of 209 million euros ($230 million) for SK On’s third EV battery plant in the country.

SK On last year announced it will build its third battery plant in Hungary with a production capacity of 30 gigawatt-hours on an investment of $2.29 billion by 2028.

The new plant will be located on 700,000 square meters in the city of Ivancha, some 50 kilometers south of Budapest, with plans to start operations from 2024.

Last year, SK On won 90 million euros of subsidies from the local government for its second plant.

By Lee Ji-yoon (jylee@heraldcorp.com)