LG Energy Solution Secures Major Battery Deal with Chinese Automaker Chery

On June 16, South Korean battery giant LG Energy Solution announced it had signed an electric vehicle battery supply contract with O&J Automotive Netherlands B.V. (O&J), a subsidiary of Chinese automaker Chery Automobile Co. Ltd.

LG Energy Solution will supply O&J with its 46-series cylindrical batteries over a six-year period, totaling 8GWh in capacity—enough to power approximately 120,000 electric vehicles. While the contract value remains undisclosed pending the conclusion of a standstill period, industry experts estimate the deal could be substantial, potentially exceeding 1 trillion Korean won (approximately $730 million).

Source: LG Energy Solution

LG Energy Solution Expands Cylindrical Battery Customer Base

LG Energy Solution positioned itself as the first Korean company to supply cylindrical batteries to Chinese automakers at scale. The company plans to begin deliveries to Chery in early 2025, with the batteries destined for Chery's flagship vehicle models. Both companies are actively discussing expanding their collaboration to include 46-series battery supplies for additional Chery electric vehicle models.

In 2021, LG Energy Solution unveiled its next-generation battery development roadmap, which included large cylindrical batteries in three configurations: 4680, 4695, and 46120 formats.

The following year marked rapid capacity deployment. In June 2022, LG Energy Solution committed approximately $2.2 billion to expand its Ochang facility in North Chungcheong Province, South Korea, adding 9GWh of 46-series cylindrical battery capacity with mass production scheduled for the second half of 2023. Subsequently, the company mapped out additional cylindrical battery capacity in the United States and Canada.

From initial announcement to capacity construction, LG Energy Solution's approach to 46-series cylindrical batteries demonstrated a "swift, precise, aggressive" strategy, primarily driven by the urgency to meet production timelines. However, the industry faced numerous technical challenges with 46-series cylindrical batteries that proved more persistent than anticipated, resulting in multiple production delays for LG Energy Solution. Commercial progress finally materialized in 2024.

On October 16, 2024, LG Energy Solution announced imminent mass production of Tesla's 4680 cylindrical batteries scheduled for December 2024, primarily intended for the Cybertruck and the Model Y Juniper planned for early 2025 launch.

Yet plans continued to face setbacks. Reports in April of this year indicated that LG Energy Solution remained in large-scale production preparation phases for the 4680 format, conducting final testing with Tesla and other OEMs. According to current projections, LG Energy Solution will commence mass production at its Korean Ochang facility in the second half of this year, followed by production at its Arizona facility in the first half of 2026.

Last November, LG Energy Solution secured a five-year supply agreement with American electric vehicle manufacturer Rivian for 67GWh of 4695 cylindrical batteries. The company also signed a preliminary agreement with Bear Robotics to serve as the exclusive cylindrical battery supplier beginning in 2025.

The supply contract with Chery represents a further expansion of LG Energy Solution's cylindrical battery customer portfolio. The company stated: "The supply contract with Chery holds significant strategic importance. We will leverage this opportunity to further expand orders for our 46-series cylindrical batteries in global markets, establishing overwhelming market leadership."

source: Chery

Chery Diversifies Battery Supply Chain

Between January and May of this year, Chery Group achieved total sales of 1,026,517 vehicles, representing 14% year-over-year growth. In the new energy segment, cumulative sales reached 287,798 units over the same period, marking 111.5% year-over-year growth.

For Chery, the supply partnership with LG Energy Solution represents a crucial step in diversifying its battery supply ecosystem. In 2024, Chery's battery suppliers included CATL, Gotion High-Tech, CALB, and its subsidiary Deyi Energy.

As Chery's primary platform for battery industrialization, Deyi Energy committed 10 billion yuan ($1.4 billion) in 2022 to establish a battery production base in Zongyang Development Zone, Tongling, Anhui Province, with annual capacity of 20GWh. The project entered substantive construction phases in February of this year.

Additionally, Chery accelerated its battery network deployment significantly last year, with markedly intensified expansion pace.

On the capacity front, Chery established several battery companies in 2024, including Anhui Qida Power Battery Technology Co., Ltd. and Shijiazhuang Qida Power.

On the product front, at the 2024 Chery Global Innovation Conference on October 18, Chery officially unveiled its Kunpeng battery brand, encompassing three major series: prismatic lithium iron phosphate (120-160Wh/kg), prismatic ternary lithium (140-200Wh/kg), and large cylindrical ternary lithium (140-240Wh/kg).

Simultaneously, Chery disclosed progress on solid-state battery development. The company revealed it was actively developing all-solid-state batteries, targeting 2026 for initial vehicle deployment (targeted operations) and 2027 for mass market launch, with energy density exceeding 600Wh/kg and pure electric range potentially surpassing 1,500km.

In May of this year, Chery's premium electric crossover—the Sterra ET—appeared in Hefei, China, prominently featuring "All-Solid-State Battery" branding on its side panels, drawing significant industry attention. The test vehicle's debut marked a critical step toward Chery's solid-state battery commercialization. Media reports noted that the Chery solid-state battery test vehicle appeared near Gotion High-Tech headquarters, which enjoys Volkswagen backing. Previously, Chery announced collaboration with Anvolt to develop solid-state batteries. According to corporate records, Chery New Energy holds a 9.89% stake in the company, while Gotion High-Tech maintains 5.89% ownership.

Weike Lithium Battery Network observed that in April, Anvolt indicated that its second-generation solid-state battery pilot production line, with energy density projected to exceed 400Wh/kg, would be completed and operational for validation in the second half of this year.

Clearly, from mainstream formats to 46-series cylindrical batteries to next-generation solid-state battery technology, Chery is constructing a diversified battery supply ecosystem, positioning itself to enhance new energy vehicle competitiveness through superior battery performance.