LG Chem to Spend $1.8 Billion to Build Their Own Electric Cars

Source: Bloomberg and GM-Volt.com

LG Chem Ltd. (051910), South Korea’s biggest chemicals maker, said it plans to spend 2 trillion won ($1.8 billion) by 2013 to expand its electric-car battery capacity.

The chemicals maker has finished building a plant in Ochang, South Korea, that can supply lithium-ion batteries for 100,000 vehicles every year, LG Chem said in a regulatory filing today. The plant is the world’s largest by capacity, the company said.

The shares rose to a record today as LG Chem said it aims to get 2 trillion won in battery sales by 2013 and 4 trillion won by 2015. The company has signed supply deals with carmakers including Ford Motor Co., China-based Chongqing Changan Automobile Co. and Renault SA, and aims to capture 25 percent of the world’s electric-car battery market within four years.

“Its efforts are starting to bear fruit after General Motors Corp. and other carmakers agreed to use its battery technology,” said Hwang Kyu Won, an analyst at Tong Yang Investment Bank in Seoul, who maintains a buy recommendation on the stock. “Annual revenue from battery sales will increase, with LG Chem maintaining an edge in the global battery market.”

The company is currently building a second plant in South Korea and a third in the U.S., with operations slated to begin in 2012. LG Chem said last year it may be able to supply batteries for 350,000 vehicles annually by 2013.

The shares rose 1.9 percent to 477,500 won in Seoul trading, compared with the 0.2 percent decline in the benchmark Kospi Index. LG Chem advanced 91 percent in the past year.

General Motors Vice Chairman Stephen Girsky, who attended the completion ceremony of the Ochang plant today, said the U.S. carmaker plans to invest 4.8 trillion won in South Korea over the next three years. He didn’t elaborate.

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