LG Chem, the father or mother firm of electrical car (EV) battery maker LG Power Answer, mentioned on Tuesday that it’s going to spend $3.2 billion to construct a cathode manufacturing plant in Tennessee.

The plant at Clarksville is aimed to have, by 2027, a yearly output of 120,000 tones of cathode, arguably crucial materials used within the manufacturing of an EV battery that determines its efficiency and value.

LG Chem mentioned the brand new plant would be the largest of its sort within the US, taking on 420 acres of house. Development will begin early subsequent 12 months with mass manufacturing slated to start in 2025.

Tennessee was your best option as a consequence of its proximity to key prospects, the corporate mentioned. Although LG Chem did not formally say so, it’s probably constructing the plant to service its subsidiary LG Power Answer.

Tennessee is the place Ultium Cells, the battery three way partnership between LG Power Answer and Normal Motors, is constructing its EV battery manufacturing plant in Spring Hill. The enterprise can also be constructing an EV battery manufacturing plant in Lordstown, Ohio.

LG Power Answer additionally introduced in August that it’s going to kind a three way partnership with Honda to construct an EV battery manufacturing plant within the US. The pair are planning to spend $4.4 billion on the mission.

The pandemic has elevated worries over potential provide chain disruption whereas the costs of uncooked materials reminiscent of nickel utilized in EV batteries has gone up in recent times. The US has additionally introduced varied insurance policies to construct its personal provide chain regionally for merchandise reminiscent of chips and batteries. Compatriot EV battery maker SK Innovation can also be constructing a battery manufacturing plant in Tennessee with Ford. It is usually planning to construct a plant by itself in Georgia.

The Tennessee facility will enable LG Chem to proactively handle the altering dynamics of the worldwide battery materials market and with laws such because the Inflation Discount Act, the South Korean chemical big mentioned. The plant will manufacture superior NCMA cathode supplies the corporate mentioned. NCMA means the cathode is comprised of nickel, cobalt, and manganese in addition to aluminum.

Cathode makers like LG Chem are trying to extend the quantity of nickel used to extend the power density of EV batteries. LG Power Answer is the world’s second-largest EV battery maker after China’s CATL and provides batteries to US automotive makers Tesla and Normal Motors and different auto giants.

In Might, LG Power Answer additionally introduced that it’s going to spend $4.1 billion with automotive maker Stellantis to construct a battery manufacturing plant in Ontario, Canada.