Two years ago, Korea was stuck between Japan’s advanced technical skills and China’s significant production capacity. Korea made a successful start by producing a roster of secondary cells in the cell phone and notebook PC market but soon went under the shadow when China appeared with more affordable and cheaper secondary cells, in which the two countries started a price war.
Nonetheless, LG Chem made a breakthrough in the electric vehicle market in the midst of a deadlock. In fact, LG Chem fired the first shot in supplying secondary cell for electric cars of GM. According to Rick Wagoner, the former chairman and CEO of General Motors, LG Chem’s cell has performance, production readiness, durability, and demonstrated track record of exceptional quality both on the road and in the lab.
The secret recipe behind LG Chem’s success is not a coincidence, but from its perfect combination of preparation, R&D, and CEO’s aggressive, but pragmatic decision making.
A decade ago, LG Chem attempted to kick start its R&D sector in the battery industry. Although it lagged behind Japan by 10 years, the company was on course, establishing its corporation in the United States in 2000 to accelerate its research on batteries and to break into markets in North America.
LG Chem’s business began to make headway only after two and a half years since its start, in which its electric car is using its self-developed lithiom-ion battery. It won first place at ‘Pikes Peak International Hill Climb’ contest, an annual automobile and motorcycle hill climb to the summit of Pikes Peak in Colorado.
Then on August of 2004, LG Chem won a contract worth US$4.6 million from The United States Advanced Battery Consortium (USABC), made up of Chrysler, Ford and GM to carry out medium-large size battery technology development project that can be adopted into hybrid cars. In addition, procurement of technical skills from persistent R&D made it possible for LG Chem to leverage its specialized abilities to expand battery business.
LG Chem made its own battery system by using its own technology that has larger output than the Japanese nickel-hydride battery by 50 percent more energy. More specifically, compared to nickel metal hydride batteries, LG Chem’s green lithium-ion batteries are more durable and space-efficient.
Also, they deliver the same power with less weight, less volume, and greater efficiency over nickel hydride batteries found today in most hybrid and electric cars. It is proven that lithium-ion polymer batteries are more resistant to changes in temperature, which in turn elongates the life cycle.
"We plan to spend roughly US$1 billion on lithium-ion polymer batteries by 2013, and I am confident that we will continue to grow into the top global supplier for EVs and HEVs," said Kim Bahn-suk, CEO of LG Chem.
On February 5, LG Chem signed a MOU to supply electric car batteries to the China based Changan Automobile Company. The batteries will likely be used in the Zhixiang Electric Vehicles (EV), and the company will release the EVs in Korea later this year. In addition LG Chem may supply lithium-ion batteries to future hybrids since they have moved away from nickel-metal hydride batteries.
LG Chem also closed a contract with Eaton Corp., the number one supplier in North America for commercial vehicle’s high-quality parts, to provide lithium-ion batteries from this coming November and for four consecutive years. LG Chem’s illustrious moments do not end here, in which the company also made a deal with CT&T, the specialized domestic company manufacturing EVs, last October to provide lithiom-ion batteries.
Moreover, LG Chem has been selected as GM Motors’ primary supplier of lithium polymer secondary batteries; GM officially dismissed Japanese counterparts such as Panasonic and Sony that once dominated the secondary battery market for electric cars.
Developing lithium polymer batteries was a blockbuster move for LG Chem, which it enabled itself to ironically outrun Japanese companies who have already stepped into the secondary battery market way before Korea.
LG Chem has been under the spotlight since GM Motors impending decision on choosing its supplier to build the Chevrolet Volt’s lithium-ion cells that in turn anticipated many motor companies, media, and electronic industries. The Chevy Volt is the first mass-produced extended-range electrical vehicle that can run up to 40 miles after a three-hour charge on a 240-volt outlet or eight to nine hours when plugged into a 120-volt socket.
LG Chem’s lithium-ion polymer batteries already made a huge impact on the global automobile industry followed by closing contracts with Hyundai’s Avante and Kia’s Forte model.
Global demand for electric cars will increase from 900,000 units last year to 3.3 million units by 2013 and 4.6 million by 2015, according to LG. Rising demand will boost the battery market to KRW10 trillion won (US$8.6 billion) by 2015.