A Toyota logo is seen on the hood of a car at the Canadian International AutoShow in Toronto, Ontario, Canada, on Friday, Feb. 16, 2024.
Toyota Motor Corp. has agreed to shift a $1.5 billion order with LG Energy Solution to bolster operations at a Michigan battery plant after General Motors Co. backed out of the project, according to people familiar with the matter.
GM said in December it would sell its $1 billion stake in the Lansing, Michigan, plant, leaving LG scrambling to find new customers. Toyota agreed to transfer an existing order from another LG plant in Michigan when LG fully acquires the Lansing facility, which is expected to happen this spring, the Japanese automaker confirmed. That purchase order totals $1.5 billion, according to people familiar with the deal, who weren’t authorized to comment publicly.
South Korean companies sank $54 billion into building EV battery plants in the US in anticipation of an EV boom subsidized by the Inflation Reduction Act, President Joe Biden’s signature climate bill. Now LG, the world’s third-biggest EV battery manufacturer, is slashing spending as automakers dial back EV plans and the White House threatens to roll back policies supporting electric cars. Congressional Republicans have vowed to cut funding for the law during upcoming budget negotiations.
The batteries Toyota is buying from LG can be used in either EVs or hybrid vehicles. Hybrids are typically less profitable for battery manufacturers because they require fewer cells.
LG is also aiming to sell some production at the plant to stationary storage customers, where demand has risen because of a boom in data centers to fuel artificial intelligence, one of the people said. The plant is gearing up to start production soon.
LG declined to comment on the Toyota order and said it will have an announcement after the plant acquisition is finalized.
“This is part of our strategic objective to further optimize our investments in North America and also respond to the needs from global automakers,” LG said in a statement.
The Lansing plant, announced in January 2022, was meant to support GM’s $35 billion push to produce 30 EV models by 2025, and create 4,000 new jobs. Since initially announcing its big push into EVs, GM has moved to reduce its exposure due to sluggish demand.
GM and LG were granted $186 million in different incentives for the Lansing project, according to GM. The automaker has been working with the state of Michigan and the Michigan Economic Development Corporation to transfer those incentives to LG, which is expected to happen in the coming months, one of the people said.
The incentive package was part of a larger deal with the state that included $480 million for GM’s planned electric truck plant in Orion Township, Michigan. The opening of that facility has been delayed until next year amid a slowdown in the growth of EV sales.
