LGES readies IPO to take on CATL

LG Energy Solution (LGES) is aiming to overtake China's Contemporary Amperex Technology (CATL) as the world's largest battery supplier, said company CEO and vice chairman Kwon Young-soo during a press conference ahead of LGES's initial public offering (IPO).

LGES is scheduled to be listed on the Korea Composite Stock Price Index (KOSPI) market on January 27, 2022. LGES has offered 34 million new shares in a price range of KRW 257,000 to 300,000 (US$216-252) apiece and is likely to raise up to KRW 12.75 trillion through the IPO with a market valuation reaching KRW 70.2 trillion.

The shares were oversubscribed by a factor of 2,023, the largest ever for an IPO in South Korea. Some domestic securities firms have predicted that LGES could eventually reach KRW 182.5 trillion in market capitalization and could surpass SK Hynix (KRW 92.5 trillion).

Speaking at an online press conference on January 10, Kwon pointed out that the company will use proceeds from its IPO to achieve three major goals. The first is to expand production capacities in South Korea, North America, Europe, and China; the second is to strengthen its next-generation battery R&D and set up a battery component company; the third is to improve the quality, safety, and diversity of its products by developing an online product monitoring system and a battery management system (BMS) for electric vehicles (EVs).

In terms of next-generation batteries, Kwon said LGES is focusing on developing lithium-sulfur and solid-state batteries. In addition to promoting adoption of Li-S batteries in drones and urban air mobility (UAM) products, the company will also begin developing battery recycling and reuse, BaaS (battery as a service), and energy storage system (ESS) projects, he explained.

Kwon also said LGES will continue to pursue business tie-ups with companies in China as the country is considered the largest EV market in the world. He added that LGES's market share could eventually overtake CATL's but that it would require some time.

As of January 2022, CATL's market capitalization exceeds US$200 billion. South Korean securities firms predict that there will still be at least a US$50 billion gap in market value between CATL and LG even after the latter becomes publicly listed.

CATL's subsidiary Contemporary Amperex Energy Service Technology (CAES) has recently launched a new brand EVOGO to make a foray into the EV battery swapping business. The EVOGO battery swapping service consists of battery blocks, fast battery swap stations, and a matchmaking app.

Designed to look like chocolate bars, EVOGO's battery blocks are specially developed for battery-sharing. A single block can achieve a gravimetric energy density of 160 Wh/kg and provide a driving range of 200 km. CATL claimed that the blocks are compatible with 80% of global battery EV (BEV) models on the current market and all BEV platform-based models to be launched in the next three years.

EVOGO's battery swap stations can house up to 48 battery blocks and allow one-minute swapping for a single battery block, while its app enables connections between customers, vehicles, swap stations, and batteries.

Stressing that the range of EVs is a problem that needs to be solved, CATL said the EVOGO service can inject new life into the market by allowing consumers to rent batteries based on their needs. It also said batteries should become shared products instead of consumer products for personal use.

Despite its support for batteries to become standardized, CATL has not clarified whether it would allow other battery makers to adopt the specifications of its batteries. As a result, some carmakers are still on the fence about adopting the EVOGO battery swap solution.

Meanwhile, Norwegian lithium-ion battery startup Freyr Battery and Taiwan-based lithium iron phosphate (LFP) battery cathode materials supplier Aleees jointly established an LFP cathode plant in the Nordic region last week.

The two companies will seek to commence production in 2024, and the proposed facility would be the world's first LFP cathode gigafactory outside China, according to Freyr. The plant is expected to mainly supply cathode materials to Freyr's 32 GWh lithium battery cell facility in Norway and develop LFP batteries.

Source: Companies; compiled by Digitimes Research, January 2022