South Korea’s biggest maker of electric-vehicle batteries is betting on rapid growth in the US following a package of climate-friendly tax breaks to close in on its biggest Chinese rival as competition in the sector intensifies.

The North American market for EV batteries is set to be the world’s fastest growing this year, said Robert Lee, LG Energy Solution’s regional head.

Korean battery makers have been boosted by the passage of the US Inflation Reduction Act, which offers billions of dollars in subsidies to companies that make EVs in the US without depending on Chinese components. The act is part of Washington’s efforts to reduce US economic dependence on China.

LGES is building a factory in Ohio to produce batteries in a joint venture with Japan’s Honda. It has further JVs with General Motors and Stellantis to produce batteries in the US and Canada and has said it is in “active discussions” to supply Tesla with cylindrical batteries from a proposed factory in Arizona.

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The IRA has “been a great law for us” but is “not necessarily the reason we’re making the investments in North America”, Lee, the head of LGES’s North American operations, told the Financial Times.

LGES expects growth in the North American battery market of between 65 and 70 per cent this year, compared with around 45 per cent in Europe and around 25 per cent in China.

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The company plans to ramp up capacity at its North American plants from 15 gigawatt hours in 2022 to 55 gigawatt hours in 2023, as it increases its capital expenditure this year by more than 50 per cent.

LGES, which has a market capitalisation of $95bn, is one of the two leading battery producers in North America, along with Japan’s Panasonic. Globally it is the biggest non-Chinese challenger to China’s CATL, which commands 37 per cent of the market, according to South Korea’s SNE Research.

CATL, which has a minimal presence in the US, recently stepped up its challenge to Korean and Japanese rivals when it agreed a deal with Ford this month to license its technology to the US automaker for a $3.5bn factory in Michigan.

Lee brushed off concerns about the Ford-CATL deal, which analysts said could yet be scuppered by political opposition in the US and China.

“We’re confident with the amount of market share that we have,” said Lee. “We’re not constrained by our lack of demand, we’re really constrained by our ability to generate more supply.”

He said LGES aimed eventually to overtake CATL, which has benefited from the booming Chinese electric-vehicle market.

“The market in China expanded earlier than other markets of the world, and the Chinese market is not open to all competitors to compete, so we were really not allowed to compete in that market in a very open way,” said Lee.

“Our aspiration is clearly to be number one globally in the long run.”

Lee said the higher energy density of LGES’s nickel-rich batteries and its relationships with global carmakers would give it a long-term advantage over its Chinese competitors.

LGES has a global market share of 13.6 per cent, on level with BYD, which recorded growth last year of 167.1 per cent. The figures refer to battery capacity installed in electric cars that have already been sold.

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