SEOUL, Dec 7 (Reuters) - South Korean battery maker LG Energy Solution (LGES) is set for a record-breaking initial public offering (IPO) in Seoul to secure the funds aimed at capturing booming global demand for EV batteries.
The company is expected to raise up to 12.8 trillion won ($10.87 billion) at a January listing, which could take the company's value to 70.2 trillion won and make it South Korea's third most valuable after Samsung Electronics Co Ltd and SK Hynix Inc.
Below is some of the history of LGES and its expansion plans in key markets.
LATECOMER
LGES, wholly owned by LG Chem Ltd before the spin-off last year, commands more than 20% of the global electric vehicle (EV) battery market and supplies to Tesla Inc , General Motors Co and Volkswagen among others.
In 1992, LG embarked on lithium-ion battery research, a distant latecomer to the market led by Japanese firms such as Panasonic and Sony. Although it managed to mass produce lithium-ion batteries in 1998, it was still a decade behind Japanese makers. A breakthrough came with the deal to supply batteries for GM's Volt in the late 2000s, one of the world's first mass-produced passenger EVs.
RIVALRY
LGES leads cross-town competition SK On and Samsung SDI with production capacity expected to reach 155 giga-watt hours (GWh) of batteries by the end of this year and plans to raise that to 430 GWh in 2025, enough to power about 7.2 million EVs.
SK On, a wholly owned subsidiary of SK Innovation , supplies to Ford Motor Co and Kia Corp among others, has combined global annual production capacity of 40 GWh and plans to increase output to 220 GWh by 2025.
LGES' bigger Chinese rival Contemporary Amperex Technology Co Ltd (CATL) had an annual battery production capacity of 65.45 GWh as of end-June and an additional 92.5 GWh capacity under construction.
INVESTMENTS
LGES, which has battery production sites in the United States, China, South Korea, Poland and Indonesia, has earmarked more than $4.5 billion for new U.S. battery production business through 2025.
That includes two new plants, jointly built with GM in Ohio and Tennessee, to manufacture 70 GWh of batteries in the United States by 2024.
In China, where it makes cylindrical battery cells for Tesla, LGES has invested about 5.7 trillion won and plans to invest another 1.2 trillion won.
It has invested about 6.8 trillion won in Poland to secure an annual production capacity of 70 GWh and plans to invest another 2.5 trillion won.
In July, LGES and Hyundai Motor Group announced a $1.1 billion plan to jointly build an EV battery cell plant in Indonesia.
In October, LGES struck a preliminary joint venture agreement with Stellantis NV to produce EV battery cells and modules for North America.
Rival SK On is giving chase with a planned 5.1 trillion won investment in the United States to be matched by Ford to build three EV battery plants https://www.reuters.com/business/autos-transportation/ford-sk-invest-114-bln-add-electric-f-150-plant-three-battery-factories-2021-09-27.
BATTERY FIRES
LGES' IPO plans had been delayed by setbacks over risks of its lithium-ion batteries catching fire, resulting in Hyundai Motor's $900 million recall https://www.reuters.com/business/autos-transportation/hyundai-motor-replace-battery-systems-900-mln-electric-car-recall-2021-02-24 involving the Kona EV and GM's $2 billion Bolt EV recall https://www.reuters.com/business/lg-units-say-results-accounted-918-mln-costs-gms-bolt-recall-2021-10-12.
Analysts estimate LG will bear about 70% of Kona EV recall costs. Automakers do not provide breakdowns of recall costs.
In October, GM said LG Chem and LG Electronics Inc had agreed to reimburse the U.S. automaker but did not say how much LG would pay.
Analysts have said battery-related fires are relatively rare but are expected to rise because of more battery-powered cars on the road. They have highlighted efforts to minimise https://www.reuters.com/business/autos-transportation/are-lithium-ion-batteries-evs-fire-hazard-2021-08-23risks such as using different battery chemistries to make battery cells more stable and cost effective. ($1 = 1,177.6700 won) (Reporting by Heekyong Yang; Editing by Jack Kim and Lincoln Feast)
