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LG Chem to set up production centre in Morocco to produce cathode for EVMs

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In a significant development, South Korea’s LG Chem, entered into a partnership with China’s Huayou Group’s subsidiary Youshan to build a joint electric vehicle (EV) battery material plant in Morocco. The plant will become operational in 2026

In a significant development, South Korea’s LG Chem, entered into a partnership with China’s Huayou Group’s subsidiary Youshan to build a joint electric vehicle (EV) battery material plant in Morocco. The plant will become operational in 2026.

The joint venture with South Korea’s largest chemical company aims to produce 50,000 metric tonnes of lithium-phosphate-iron (LFP) cathode materials annually. This level of production can cater to installing equipment in 500,000 entry-class EVs.

LG Chem, known for manufacturing more expensive nickel-cobalt-manganese (NCM) cathodes, is entering the LFP cathode business for the first time to meet the growing demand for cheaper LFP batteries. The auto industry is stepping up its efforts to produce more affordable EVs as batteries are the most expensive part of EVs. Battery cost constitutes an average of 40% of the total cost of the EVs.

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LG Chem said LFP cathodes produced at the Morocco plant will be supplied to the North American market and receive subsidies from the U.S. Inflation Reduction Act (IRA) as Morocco is a free-trade partner with the United States. The IRA is designed to wean the United States off the Chinese supply chain for EVs. It requires at least 40% of the value of critical minerals used in an auto battery to be sourced from the United States or a free trade partner to qualify for a US$3,750 tax credit per vehicle. South Korea has a free-trade agreement with the United States, the Reuters report explains.