In short: LG Energy Solution (LGES), the world’s second-largest electric vehicle battery maker and a major supplier to Tesla, is revising its plans to build a $1.3 billion plant in Queen Creek, Arizona, as U.S. inflation continues to rise, resulting in to what he calls “unprecedented economic conditions.”
LGES plans to build plant in Arizona with a capacity of 11 GWh per year for the supply of cylindrical batteries for electric vehicles and power tools. Earlier this year, the company announced that construction on the facility should begin in the second quarter, with mass production scheduled for the second half of 2024.
But the plant may not go further. LGES said it is currently reviewing various investment options in light of “unprecedented economic conditions and investment circumstances in the United States.” The representative of LGES clarified Reuters that the company will reconsider its investment in the Arizona plant.
Rising construction costs, declining demand for batteries, rising inflation, and an economic downturn are all factors that cause LGES to fluctuate. It will take at least one to two months for the company to decide whether to abandon plans for the Arizona plant. However, it is still building three plants with General Motors in Ohio, Tennessee and Michigan and intends to expand its existing plant in Michigan.
A volatile economy and recession fears are affecting several tech companies. Tesla laid off part of its workforce, leading to a federal lawsuit. CEO Elon Musk also required employees to work at least 40 hours a week in the office. Unfortunately, there doesn’t seem to be enough parking spaces or desks in Tesla’s offices to accommodate them.