EV & battery
Toyota buys 25% in LG Chem cathode plant to comply with US regulations
Toyota Tsusho, which manages raw material procurement for the Toyota Group, has bought a 25% stake in the LG Chem cathode materials plant in Gumi, South Korea.
Toyota Tsusho plans to supply a portion of the cathode materials made at the plant to battery manufacturing customers in North America, including those supplying Toyota and GM.
The move by Toyota to become the second largest shareholder in the LG-HY BCM plant ensures that it complies with updates to the US Inflation Reduction Act (IRA). The newly redefined criteria for Prohibited Foreign Entry introduced in July this year mean that entities with more than 25% ownership by restricted parties may be excluded from relevant tax breaks. Toyota Tsusho has bought its 25% in the venture from Huayou Cobalt, a Chinese materials company, which previously held a 49% stake in the Gumi plant. Huayou Cobalt qualified as a “prohibited foreign entity of concern” under the US rules on trade by being a Chinese company that held more than 25% interest in LG-HY BCM.
Huayou Cobalt’s previous stake meant batteries made from the material and the EVs they were placed in were ineligible for full EV tax credit of $7,500 (though those EV tax credits are due to end after September 30 following Trump’s Big Beautiful Bill).
“Toyota Tsusho’s equity participation marks a pivotal turning point as LG Chem strengthens its cathode supply competitiveness under the US IRA framework,” said LG Chem CEO Shin Hak-cheol. “We will further solidify our leadership in the battery materials market on the strength of world-class products and powerful global partnerships.”
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In 2024, LG Chem signed a long-term contract worth KRW 25 trillion ($18 billion) to supply cathode materials to GM for its battery electric vehicles (BEVs), enough to power 5m of them. In 2023, LG Chem also signed a long-term contract, worth KRW 2.9 trillion, to supply cathodes to Toyota Motor Engineering & Manufacturing North America (TEMA).
According to LG Chem, the Gumi plant is a key production hub with an annual capacity for 66,000 tons of cathode material. LG Chem is expanding its global customer base and supply network, which includes manufacturing facilities in Cheongju and Gumi (Korea), Tennessee (US, set to open in the second half of 2026) and Wuxi (China).
