SEOUL, AJU - Geely, an aggressive investor in the electric vehicle market, has agreed with LG Chem, a major battery maker in South Korea, to set up a joint venture for batteries that would be used by electric vehicles produced by the Chinese auto group.
LG Chem said Thursday that it has signed a joint venture deal at Geely’s research center in Ningbo in China’s Zhejiang province. Geely is based in Hangzhou in China’s Zhejiang province, but the site for the joint venture factory was not disclosed. Construction will begin at the end of this year for completion in 2021.
The two companies will invest 103.4 billion won ($87.2 million) each to equally share the joint venture. The joint venture factory will have a capacity of 10GWh of batteries, which will be supplied to electric vehicles to be produced by Geely and its subsidiaries.
“While battery makers around the world are pushing for various joint ventures to advance into the Chinese market, we have gained the upper hand in tapping into the Chinese market by securing Geely, the No. 1 local automaker, as a partner," said LG Chem’s battery project division president Kim Jong-hyeon.
China will end its subsidy policy in the electric vehicle market after 2021. From 2020, Geely plans to plans to convert 90 percent of its vehicles into electric cars.
Geely acquired Volvo’s passenger car division in 2010 and purchased a 9.69 percent stake in Daimler AG, the owner of Mercedes-Benz. Geely and Volvo have jointly launched an eco-friendly vehicle brand named Lynk & Co and plan to release hybrid, plug-in hybrid and electric vehicle models.
LG Chem’s domestic rival, SK Innovation (SKI), has expanded the production of batteries for electric vehicles in China. In May, SKI’s board approved 579.9 billion won ($487 million) for an investment to build a new battery plant in China. SKI has built a battery plant in Changzhou in China’s southeastern Jiangsu province.