LG Energy Solution, South Korea’s largest electric vehicle battery maker, and Hanwha Group, a defense and energy giant, are teaming up to seek business synergy in the burgeoning battery market, they said in a statement on Monday.
According to the statement, LG Energy Solution and three Hanwha companies – Hanwha Q Cells, Hanwha Momentum, and Hanwha Aerospace – signed a memorandum of understanding earlier in the day to bolster bilateral ties.
Under the MOU, the two agreed to secure an earlier edge in the secondary battery-based energy storage systems market in the US as they jointly invest in expanding production lines and developing related systems solutions.
With the latest partnership, Hanwha said it was securing a stable battery supply for its US expansion.
Demand for energy storage systems is on the rise as they are increasingly used for power grid stabilization and efficient power management.
According to industry estimates, the market is expected to grow from 9 gigawatt-hours in 2021 to 95 GWh in 2031, fueled by the recent enactment of the Inflation Reduction Act that offers hefty incentives for eco-friendly businesses. The ninefold increase means storage equivalent to the electricity used by 40 million people daily in South Korea.
Hanwha Momentum, specializing in automated engineering solutions, also plans to help build production facilities domestically and abroad, while Hanwha Aerospace has hopped on board to develop special purpose batteries for UAM, its key growth driver.
With the deal, LG Energy Solution has also secured a crucial new client in the fast-growing US market, diversifying its business portfolio for its longer-term growth there.
The company has made massive investments to ramp up production capacity in North America in collaborations with carmakers, including General motors, Stellantis and Honda.
"We will strengthen our teamwork in various fields such as battery manufacturing facilities and special purpose battery development," a Hanwha official said.
"Through this cooperation, we expect to increase competitiveness of our battery-related businesses. We will strive to provide eco-friendly energy solutions," an LG Energy Solution official said.