LG Energy Solution on Friday announced a $5.5-billion battery manufacturing complex in Queen Creek, Arizona. The company claims the plant will be the largest battery-making investment in the U.S. to date.

The complex will consist of two manufacturing facilities—one for 2170-format cylindrical battery cells for EVs, and another for pouch-type cells for energy storage systems. The latter will use a lithium iron phosphate (LFP) chemistry.

2022 Lucid Air 2022 Lucid Air

The investment will be split, with $3.2 billion going toward the EV battery facility and $2.3 billion for the energy storage LFP battery facility. LG Energy Solution plans to break ground on both later this year, and start production of EV battery cells in 2025, with a targeted annual production capacity of 27 gigawatt-hours. Energy storage cell production is scheduled to start in 2026. LG is targeting production of 16 gigawatt-hours of these cells annually.

LG’s total planned investment outdoes the plant Panasonic is building near Kansas City, which at the time of announcement it called the largest in the world by investment, at around $4 billion. Panasonic hasn’t detailed exactly which types of cells will be made at this plant, its first in U.S. outside of its Tesla partnership.

The announcement was made just days before the federal government is expected to reveal details regarding compliance with the Inflation Reduction Act (IRA) on North American sourcing for battery raw materials. In a press release, LG said demand for locally-manufactured battery cells to satisfy the IRA’s tax-credit rules factored into the decision for the Arizona plant. The company expects North American EV makers to be the main customers for cylindrical cells manufactured there.

2024 Chevrolet Blazer EV2024 Chevrolet Blazer EV

As The New York Times points out, current LG customers include General Motors, Ford Motor, Honda and Tesla. Lucid is also one, and it assembles its cars nearby in Casa Grande, Arizona. Among them, Tesla and Lucid are the only two that currently use cylindrical cells. After rumors that GM was considering cylindrical cells, its CEO underscored that it’s flexible.

LG in 2020 aimed to triple cylindrical cell production, with new form-factor cylindrical cells—although this plant, according to the announcement, will focus on the familiar 2170 format.

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