Photo: LG Chem/Facebook
On Friday, LG Chem (US, OTC: LGCLF), South Korea's top petrochemicals firm, held a shareholder meeting that approved a plan to split its battery business into a new company, tentatively named LG Energy Solutions.
“While the battery business is expected to post enormous growth, competition is intensifying from not only other battery makers but automakers,” LG Chem Chief Executive Officer Hak Cheol Shin told a shareholder meeting in Seoul. “We have decided to separate our battery business to better optimize our management in today’s fast-changing market environment.”
The division will be launched on December 1, with first being a wholly-owned subsidiary, and then up to 30% of the company's shares could be included in an initial public offering, Reuters reported.
At the end of September, there was a rumor that Tesla (NASDAQ: TSLA) was going to acquire up to 10% of LG Energy Solutions' shares. "Tesla is looking to acquire a stake in LG Energy Solution. Specifically, Tesla is said to be exploring taking up to a 10 percent stake in LG Energy Solution," one source said to The Korea Times on condition of anonymity as he wasn't authorized to speak officially to the media.
Any direct investment in LG Chem would help Tesla acquire suitable batteries for use in Tesla's electric vehicles without any major risks. Despite the fact that Tesla introduced its own production of battery cells, for the moment this is only a test line. In the near future, the company will not be able to produce battery cells on the scale it needs. The new partnership will help Tesla provide itself with the necessary amount of battery cells.
However, a senior LG official told Reuters, on condition of anonymity as he was not authorized to speak to the media, he had never heard of Tesla's investment in LG.
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Eva Fox joined Tesmanian in 2019 to cover breaking news as an automotive journalist. The main topics that she covers are clean energy and electric vehicles. As a journalist, Eva is specialized in Tesla and topics related to the work and development of the company.