LG Energy Solution and Toyota announced Thursday that they have signed a 10-year supply contract for lithium-ion battery modules to be used in Toyota’s battery electric vehicles assembled in the United States, marking the first collaboration between the Korean battery maker and the Japanese auto giant in the burgeoning EV market.

LG Energy Solution said it will invest 4 trillion won ($3 billion) in its Michigan plant to set up new production lines for battery cells and modules exclusively made for Toyota EVs with completion expected in 2025, when the contract is set to begin.

With the additional production lines, LG Energy Solution will have 20 gigawatt-hours per year in extra capacity at the Michigan facility, which will be enough to power 250,000 BEVs or more. The expansion will bring up the Michigan plant’s production capacity to 40 GWh.

"We’re excited to have Toyota, the best-selling global automaker, as our new customer. With our 30 years of experience in lithium-ion batteries, we will provide innovative power solutions to support Toyota’s push into battery electric vehicles," said Kwon Young-soo, CEO of LG Energy Solution. "The agreement also presents another big opportunity for us to strengthen our production capacity in North America, thereby bringing more real-life, large-scale progress toward electrification in the region."

According to the announcement, the battery modules, which will consist of high-nickel NCMA (nickel, cobalt, manganese, aluminum) pouch-type cells, will be supplied to Toyota Motor Manufacturing Kentucky to be assembled into battery packs and fitted onto BEVs.

The collaboration with LG Energy Solution is expected to support Toyota’s expanding BEV portfolio as the Japanese automaker aims to provide 30 BEV models under its Toyota and Lexus brands and produce up to 3.5 million BEVs per year across the world by 2030.

"Having secure supplies of lithium-ion batteries at scale with a long-term relationship to support Toyota’s multi-pathway approach and growth plans for BEVs in North America is critical to achieve our manufacturing and carbon reduction plans," said Tetsuo Ogawa, CEO of Toyota Motor North America. "Working with LG Energy Solution, we are excited to be able to offer products that will provide the performance and quality our customers expect."

According to LG Energy Solution, the Toyota deal is the battery maker’s single largest supply contract secured outside joint venture agreements. With this contract, LG Energy Solution now provides batteries to the five biggest automakers in the world: Toyota, Volkswagen, Renault-Nissan, Hyundai Motor Group and General Motors).

LG Energy Solution, which has two independent plants and six joint venture manufacturing facilities in operation or under construction in North America, said it will continue to build up its customer portfolio and expand global production capacity. As of June, the company’s accumulated order log reached 440 trillion won.

In January this year, LG Energy Solution and Honda, the No. 2 Japanese carmaker, announced that they will set up a joint venture to build a 40 GWh battery manufacturing plant in Ohio with an investment of $4.4 billion.