Stellantis, the automaker formed through a merger with Fiat Chrysler Automobiles and Groupe PSA, has reached a preliminary deal with LG Energy Solution to produce battery cells and modules in North America.
The deal, which still must be approved by regulators, is part of Stellantis' plan to invest €30 billion ($34.8 billion) in electrification and software through 2025 in a bid to offer EV options for every model it produces in the U.S. and to reach specific sales goals for the region. The company has said it wants EVs to make up more than 40% of its U.S. sales by 2030. The facility will help Stellantis achieve a total minimum of 260 gigawatt hours of capacity by 2030, according to CEO Carlos Tavares.
The news comes the same day as Toyota announced its own plans to build a battery factory in the United States. Toyota Motor North America and Toyota Tsusho announced plans to build an automotive battery plant with the aim of starting production in 2025. The project includes an investment of about $1.29 billion until 2031, Toyota said. Toyota said it will invest about $3.4 billion in automotive batteries in the U.S. through 2030.
Under the joint venture, Stellantis and LG Energy will build a new factory with an annual capacity of 40 gigawatt hours that will be up and running by the first quarter of 2024. To put that into perspective, that capacity puts it on par with the massive Panasonic-Tesla gigafactory in Sparks, Nevada. Tesla and Panasonic initially planned for the Gigafactory to have the capacity to produce 35 gigawatt hours of batteries each year.
The companies didn't disclose the total cost of the factory or where it will be located. The location is under review and will be announced at a future date. Stellantis and LG Energy expect to break ground at the site in the second quarter of 2022.
Batteries produced at the factory will be supplied to Stellantis and used in the production of plug-in hybrids to full battery electric vehicles at the automaker's assembly plants in the U.S., Canada and Mexico.
The companies have worked together since 2014, when LG Energy began supplying FCA lithium-ion battery pack systems and controls for the Chrysler Pacifica Hybrid.