Last minute order placement for factory going live in 2022
LG Energy Solution has placed additional orders for mixing equipment used in battery production for the factory at Lordstown, Ohi, run by its joint venture Ultium Cells with General Motors, TheElec has learned.
Related companies were notified of the order from LG Electronics’ Production engineering Research Institute (PRI), people familiar with the matter said. LG PRI handles production equipment purchases and development for LG affiliates.
LG Energy Solution had initially signed a contract to procure the mixing equipment from Yunsung F&C.
But there has been differences of opinions on contract price and delivery deadlines between LG Energy Solution, LG Electronics and the supplier, the people said.
However, while LG Electronics admitted that it has placed additional orders for mixing equipment, the company said the new orders for three additional mixing equipment and had nothing to do with prior order.
LG Energy Solution plans to use four mixing equipment; the prior equipment was for the first one and the new orders for are the remaining three, LG Electronics explained.
However, people familiar with the matter said it was very rare for battery companies to place additional orders at the last minute to add a competing supplier of equipment, when production will start less than a year away.
The factory at Lordstown is scheduled to begin mass production next year.
The order from Yunsung and the latest order is also eight months away, which is highly unusual, they said.
The move can be a result of a continuation of LG Energy Solution’s attempt to bypass LG PRI for production machinery.
Up to 2019, LG Energy Solution had used suppliers through LG PRI but beginning last year has been increasing direct suppliers. Earlier this year, LG Energy Solution attempted to use lamination equipment from DSK, a company that isn’t registered to LG PRI as a supplier. LG PRI’s supplier Naintec and Shinjin Mtech were eventually used, but LG Energy Solution succeeded in using DSK’s equipment for its factory at Poland.
If the mixing equipment order is late for Lordstown, this will give LG Energy Solution more fodder to argue that it will increase the number of direct suppliers instead of using LG PRI.