LG Chem to Build $303M Volt Battery Plant in Holland, Mich.

Regardless of all the possible benefits of having a battery manufacturing industry in the U.S. for plug-in vehicles, building out that fledgling industry won’t come cheap. This morning an announcement from LG Chem — the Korean electronics behemoth whose U.S. subsidiary Compact Power will supply lithium-ion cells for General Motors’ (s GM) upcoming Chevy Volt — offers a reminder of the big investments that lie ahead. LG Chem said today that it plans to build its first U.S. plant for battery cells — a $303 million project — in Holland, Mich.
LG Chem plans to finance the project with a $151.4 million grant awarded by the Department of Energy last summer. That battery grant program requires winners to share at least half the project costs, and LG Chem will invest $151.5 million in the new facility. Groundbreaking is scheduled to kick off this summer, according to today’s release, with full-scale operation targeted for 2012. By 2013, LG Chem expects the plant to create more than 400 jobs.

The siting of this project marks a win for the city of Holland in a time when local and state governments across the country are competing aggressively to woo government-backed battery makers. The Holland Sentinel writes this morning that the DOE grant was awarded for “lithium-ion battery cell production for one of three Michigan cities, including two closer to Detroit.”
Holland, where Johnson Controls-Saft is also setting up manufacturing, beat out St. Claire and Pontiac for the project, and according to local officials quoted in the Sentinel, that’s partly because of a reliable power supply for a plant estimated to require 15-20 MW at peak demand. LG Chem’s senior vice president said in a statement this morning that the decision came down to “the city’s excellent infrastructure and proven, quality workforce.”
It’s no coincidence that battery makers are setting up shop in Michigan. In addition to the benefit of proximity to car makers, the state has offered hundreds of millions of dollars in tax credits for battery makers including Compact Power, Johnson Controls-Saft and A123Systems (s AONE).