If LG Chem wants to surpass CATL, it can’t just rely on Tesla

This means that although CATL far exceeds LG Chem in terms of installed capacity, the gap between LG Chem and CATL in terms of global production capacity is not that large. In fact, in terms of capacity distribution, the former has some advantages over the latter.

Perhaps it is for this reason that LG Chem is confident in saying that it has the opportunity to surpass CATL. In order to achieve this goal, LG Chem has focused on CATL's "shortcomings" - production capacity.

According to LG Energy Solution's IPO prospectus, in addition to using part of the funds raised from the IPO to research and develop new products and improve product quality and technology, the remaining funds will be used to expand its own production capacity. These expanded production capacities are distributed in countries such as Poland, China and the United States.

Among them, LG Chem has invested 23.448 billion yuan in the Polish battery factory, and will invest another 5.971 billion yuan in the future; for the Michigan battery factory and Ultium Cells battery factory in the United States, LG Energy Solution has invested 3.109 billion yuan and 4.802 billion yuan respectively, and will invest 8.639 billion yuan and 24.310 billion yuan respectively in the future.

In addition to overseas markets, LG Chem is also investing in the Chinese market. According to the prospectus, LG Energy Solution has invested 16.123 billion yuan and 8.501 billion yuan in the China Nanjing Battery Factory and China Binjiang (Nanjing) Battery Factory, and will invest 7.383 billion yuan and 2.531 billion yuan respectively in the future.

According to LG Chem's plan, by 2025, the production capacity in the three major regions of North America, Europe and China is expected to reach at least 160GWh, 100GWh and 60GWh respectively, and the total capacity will reach 342GWh.

In addition to actively expanding its production capacity, LG Chem is also making arrangements in upstream raw materials for power batteries.

In 2020, LG Chem reached a cooperation agreement with Weihua Co., Ltd. to purchase fine-ground lithium hydroxide raw materials; in the same year, LG Chem also reached a long-term cooperation agreement with Chile's SQM, which will supply lithium carbonate raw materials to the former from 2021 to 2029.

At the same time, in order to ensure the supply of nickel, LG Chem also plans to invest US$9.8 billion to build a factory in Indonesia, covering upstream and downstream industrial chains such as nickel mining, refining and battery production.

The above series of actions are regarded by the industry as LG Chem's attack on CATL, but in the industry's view, it will not be easy for LG Chem and LG Energy Solution to surpass CATL in the future.

"First of all, looking at the market value of the two, CATL has exceeded more than 200 billion US dollars and is in a stable state. As for LG Energy Solution, although its market value is close to 100 billion US dollars after its listing, due to the limited circulation volume of the Korean Stock Exchange, its stock price and market value may fluctuate greatly in the future." Liu Chang, an investor who has been paying attention to the new energy field for many years, told Lianxun Travel.

Liu Chang also said that although LG Energy Solution's production capacity layout, especially its global layout, is richer than that of CATL, CATL has also been stepping up its layout in overseas markets in the past two years and is further enriching its production capacity lines. It is also also planning new product lines such as sodium batteries.

In September last year, CATL carried out a new round of fixed increase plan, according to which it will raise 58.2 billion yuan, which will be used for the construction and expansion of 7 projects with a total of 137GWh of power lithium batteries and 30GWh of energy storage cabinets. CATL expects to add 240GWh of planned production capacity from 2022 to 2023, and the total production capacity will be close to 600GWh by 2025, far exceeding LG Chem's planned production capacity during the same period.

Image source: CATL official WeChat account

In addition, CATL is also actively developing overseas layout. In November last year, CATL and YPF, a well-known lithium mining company in Argentina, began to negotiate on strategic partnership of lithium resources. Pablo González, president of YPF, once said that he hoped to establish a good cooperative relationship with CATL.

The following month, according to Asia Daily, CATL plans to invest 2 billion euros to build its first overseas factory in Poland, and has already visited towns such as Jawor in western Poland. CATL declined to comment on the news, but the industry believes that the news is highly credible.

At present, it is difficult for LG Chem to surpass CATL in the short term. But what is certain is that as power battery companies expand production and more car companies start to develop their own batteries, LG Chem will face more intense competition in the future power battery battlefield.

Therefore, for LG Chem, perhaps only by listing LG New Energy Vehicle can it gain more advantages in the future.