LG Chem to Supply Batteries For Audi Plug-In Hybrids

SEOUL—South Korean battery maker LG Chem Ltd. has reached a deal to supply hundreds of millions of dollars worth of batteries for plug-in hybrid vehicles to Audi AG, a unit of German auto maker Volkswagen AG.

LG Chem, the world's largest battery maker by sales, didn't disclose details of the deal, but said it would help Volkswagen bolster sluggish global sales of plug-in hybrid or electric vehicles.

"The batteries will be used in Audi's next-generation plug-in hybrid electric vehicles. Given that Audi shares many auto platforms with parent Volkswagen, we expect more such deals from the German auto group," LG said in a statement Wednesday.

LG Chem didn't disclose the exact value of the deal, saying only that it is worth hundreds of billions of won. It also declined to reveal when it will start delivering the batteries, saying only that the timing will be closely linked to the launch of Audi's new vehicles.

A spokesman for Audi in Korea declined to comment.

LG Chem currently produces batteries for electric or plug-in hybrid cars made by auto makers such as General Motors Co., Renault SA, Ford Motor Co., Hyundai Motor Co. and Kia Motors Corp.

Its deal with Audi comes as several European auto makers, including BMW AG, Volkswagen and Daimler AG's Mercedes-Benz unit, are introducing new electric or plug-in hybrid vehicles to comply with strict new emissions rules in Europe.

Despite car makers' aggressive efforts, including free charging stations and price cuts, the vehicles haven't been hot sellers globally. Consumers' concerns include the vehicles' relatively short driving range, long charging times and a lack of charging stations.

LG Chem announced last week that it is jointly developing, with several global auto makers, a battery pack that will enable cars to drive 200 miles on a single charge—more than double that of most batteries in electric or plug-in hybrid vehicles on the road today.

LG Chem, which has factories in the U.S. and South Korea, said in July that it will build another battery plant in China by next year, betting on rapid growth in the world's biggest car market.

The company said it aims to achieve cumulative revenue of over 10 trillion won ($9.8 billion) from its battery business by 2018, when the global market for batteries used in electric or plug-in hybrid vehicles is expected to more than double to $13 billion from this year.