LG Chem sees more battery orders for GM's Volt in 2011

SEOUL Sat Nov 13, 2010 7:02pm EST

A Chevrolet Volt sits plugged into a newly installed electric charging station outside General Motor Co world headquarters in Detroit, Michigan October 12, 2010. REUTERS/Rebecca Cook

A Chevrolet Volt sits plugged into a newly installed electric charging station outside General Motor Co world headquarters in Detroit, Michigan October 12, 2010.

Credit: Reuters/Rebecca Cook

SEOUL (Reuters) - South Korea's LG Chem expects to secure more battery orders for General Motors Co's upcoming Volt electric cars for 2011 because of higher-than-expected demand for the car to be rolled out in the United States later this year, an LG Chem executive said.

LG Chem, which started to supply batteries for Volt in September under a six-year exclusive contract, said demand for the Volt was expected to be further fueled by the move by General Electric Co to buy 25,000 electric cars, including 12,000 from GM over the next five years.

The Volt has been the centerpiece of GM's effort to reinvent its line-up as the maker of fuel-efficient cars, and its planned launch comes at a crucial time when the U.S. automaker plans to go public.

"(GM said that) its Volt has drawn good response from consumers. GM is likely to order far more batteries than we have previously planned for next year," Ham Jae-gyung, senior vice president of LG's car battery division, said at a briefing, without disclosing the size of the possible order.

GM previously planned to build 10,000 of the Volt cars in 2011 and about 30,000 in 2012.

But the U.S. automaker said in July it will increase Volt production capacity by 50 percent to 45,000 units in 2012, from 30,000.

"We expect GM to ask for more batteries following the news (that GE plans to purchase electric cars)," Ham said.

The Volt is expected to directly compete with Nissan Motor Co's electric vehicle Leaf, which will also go on sales in the United States later this year.

LG Chem plans to boost its annual production capacity at its Korean car battery plant sevenfold to 60 million cells by 2013, with investment of 1 trillion won ($887.1 million) by that year.

LG Chem will also spend additional $300 million on its U.S. plant by 2013, which will have an annual output capacity of 20 million cells.

Ham said the company does not plan to build electric car battery production lines in China or Europe for now.

LG Chem, which started operations of its Korean battery plant in June this year, in September started to produce and supply batteries for Volt and Hyundai Motor's Sonata hybrid.

LG Chem's U.S. battery plant will start production in 2012.

LG Chem, the global leader in electric car batteries, has clinched a slew of battery orders from automakers, most recently Renault.

However, its much-touted car battery business has not been able to generate meaningful revenue for the South Korean manufacturer of chemicals and rechargeable batteries for mobile devices, as the market has not taken off.

The company aims to earn 3 trillion won in revenue from its car battery business in 2015.

(Reporting by Hyunjoo Jin; editing by James Jukwey)

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