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(2nd LD) LG Chem, Geely to set up EV battery joint venture in China

All Headlines 13:52 June 13, 2019

(ATTN: CLARIFIES 7th para)

SEOUL, June 13 (Yonhap) -- LG Chem Ltd., South Korea's top chemicals company, said Thursday it will establish a EV battery joint venture (JV) with Geely Automobile Holdings Ltd. in China in a push to tap deeper into the neighboring country's fast-growing EV market.

Under their agreement signed in Ningbo, Zhejiang province, China, on Wednesday, LG Chem and Geely agreed to establish a 50:50 venture. LG Chem and Geely will each chip in some US$87 million.

The construction of their EV battery plant with a capacity of 10 gigawatt hours will start later in the year, according to LG Chem.

The South Korean company said EV batteries from the joint venture will start being placed in autos to be produced by Geely in 2022.

Geely, the No. 1 local brand in China, with 1.5 million units sold in 2018, aims to have 90 percent of its autos run on electricity in 2020.

LG Chem said the latest deal will expand its presence in the world's top EV market and ensure a stable supply of EV batteries. The company said it will actively seek JVs with other global automakers for EV battery production.

Geely is a subsidiary of Zhejiang Geely Holding Group, which also owns brands like Swedish luxury carmaker Volvo and British sports car manufacturer Lotus.

South Korean EV battery makers have been moving into the Chinese market aggressively in recent years after Beijing announced that it will halt its EV subsidy program by the end of 2020.

Since 2016, the Chinese government has been providing subsidies for EV cars with China-made batteries only in order to protect local players. But with such regulation set to be scrapped in the coming years, industry observers said South Korean companies will further seek partnerships with Chinese EV makers for stable battery supply.

In this photo provided by LG Chem Ltd., officials from LG Chem Ltd. and Geely Automobile Holdings Ltd. pose for the camera after signing a joint venture deal at Geely Auto Research Institute in Ningbo, Zhejiang Province, China, on June 12, 2019. (PHOTO NOT FOR SALE) (Yonhap)

kdon@yna.co.kr
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