Tencent Technologies News, according to foreign media reports, Korean lithium battery manufacturer LG Chem announced on Thursday that it will set up a joint venture with Chinese automobile manufacturer Geely Automobile Group to produce batteries for electric vehicles. The joint venture plans to ensure 10 gigawatt-hours of battery capacity per year by the end of 2021.

According to foreign media reports, the Korean battery manufacturer said it signed a joint venture contract with the Chinese automobile manufacturer Wednesday at the Geely Group Research Center in Ningbo City, Zhejiang Province, with the same amount of investment per company.

Under the contract, LG and Geely will each invest 103.4 billion won to build an electric vehicle battery production facility with an annual capacity of 10 gigawatt hours by 2021.

The factory is scheduled to break ground by the end of this year. The location and official name of the facility will be confirmed later.

Batteries produced by the joint venture will supply batteries for electric vehicles produced by Geely and its affiliates. Geely and its subsidiaries plan to launch electric vehicles in China from 2022.

The Chinese car group owns Swedish Volvo Motor Company, British Lotus Motor Company and Malaysian car brand Proton.

Geely plans to convert 90% of its commercial cars into battery-powered vehicles starting next year. Statistics show that the company is the largest automobile manufacturer in China's domestic market, selling 1.5 million cars in 2018.

An executive at LG Chemical said:

The industry expects China to become the largest market for lithium-ion battery vehicles, accounting for about 50% of the global market. Korean battery manufacturers have been laying the foundation for a partnership with Chinese manufacturers.

According to a study by Mirae Asset Daewoo, a Korean financial institution, annual sales of electric vehicles in China are expected to increase from 1.5 million in 2020 to 3.5 million in 2023 and 5.8 million in 2025.

Because the Chinese government only provides subsidies to domestic battery companies, there are some challenges for Korean battery manufacturers to explore the Chinese market. In addition, after 2021, China will terminate its subsidies for automotive batteries.

Kim Jong-hyun, president of LG's chemical energy solutions business, said:

According to foreign media reports, in April 2018, LG Chemistry and Zhejiang Huayou Cobalt Co., Ltd. of China established another joint venture to establish production facilities for battery precursors and cathode materials. The joint venture plans to invest a total of 239.4 billion won by 2020.

Beginning next year, the joint venture will produce 40,000 tons of related battery materials, which can meet the needs of 400,000 electric vehicle power batteries (battery packs are calculated to last 320 kilometers per charge). (Tencent Technology Revision/Chengxi)