South Korea’s LG Energy Solution Ltd. has signed a long-term supply deal with a Chinese cathode materials producer for lithium iron phosphate (LFP) battery cathode materials used in electric vehicles and energy storage systems (ESS).

Under the agreement, LG Energy Solution will receive 160,000 tons of cathode materials from Changzhou Liyuan New Energy Technology Co. for five years starting this year, the company said on Thursday.

The supply can fuel over one million EVs capable of traveling more than 400 kilometers. Both companies are open to further deals based on market conditions.

Established in Nanjing in 2021, Changzhou Liyuan New Energy Technology is a manufacturer of LFP cathode materials, with an annual production capacity of 310,000 tons.

It also has production facilities in Indonesia, capable of producing around 30,000 tons of LFP battery cathode materials. The company plans to expand the facility’s capacity to 120,000 tons in the future.

LG Energy Solution expects the latest partnership to bolster its position in the LFP battery market, having already begun mass production of LFP batteries for ESS in China since the end of last year.

Mass production of LFP batteries for EVs is slated for the second half of 2025, its Chief Executive Officer Kim Dong-myung said last year before attending industry meetings.

LG Energy Solution is reportedly exploring new suppliers in Europe and North America.

LG Energy Solution is expanding its product range from premium offerings like NCM and NCMA batteries to entry- to mid-range options such as mid-nickel high-voltage and pouch-type LFP batteries, according to its Chief Financial Officer Lee Chang-sil in a recent conference call.

The company also plans to improve cost competitiveness by expanding sources of raw materials, seeking technological advancements in key materials, and strengthening investments in the supply chain.

By Pulse

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