LG Energy Solution Ensures Compliance with IRA Standards for Battery Minerals

LG Energy Solution Secures IRA-Compliant Battery Minerals

LG Energy Solution Secures IRA-Compliant Battery Minerals

LGES Partnership with Liontown

LG Energy Solution (LGES) has entered an agreement with Tesla lithium supplier Liontown to secure IRA-compliant battery minerals. The two companies signed a convertible note subscription agreement on July 4, 2024. Liontown will supply LG Energy Solution with high-quality lithium spodumene from its Kathleen project. Additionally, they will explore the possibility of establishing a lithium refinery in the future.

Key Aspects of the Agreement

  • Extension of existing 5-year offtake agreement by an additional 10 years
  • 700kt of spodumene concentrate over the first 5 years and 1,500kt spodumene concentrate over years 6 to 15
  • Up to 250kt spodumene concentrate available over the first 10 years
  • Investment of US$250 million through Convertible Notes

Impact on LG Energy Solution

LG Energy Solution’s partnership with Liontown secures its battery supply chain in the United States as it ramps up 4680 production. Liontown also has lithium supply agreements with Tesla and Ford. LGES is preparing to start 4680 production in South Korea and prioritizing the buildout of its 4680 battery assembly line in Arizona.

IRA Compliance and tax credits

Battery minerals and their place of origin play a significant role in the IRA’s maximum credit. Critical battery minerals account for a portion of the credit, with specific percentage goals set for the value of critical minerals contained in electric vehicle (EV) batteries that automakers must meet.

Applicable Percentage Goals

In 2023, the applicable percentage was 40%. This means that 40% of the minerals used in EV batteries must be extracted or processed in the United States, a country with a free trade agreement with the US, or recycled in North America. The applicable percentage increases by 10% each year until it reaches 80% in 2027.

IRA tax credits

Many EVs did not qualify for the full $7,500 tax credit due to battery mineral requirements. The US government has issued mineral exemptions to allow automakers time to adjust their battery supply chain. Below are the lists of EVs that qualify for the IRA’s tax credits.

Contact Information

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Read More of this Story at www.teslarati.com – 2024-07-09 04:21:03

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