LG Chem said Wednesday it broke ground to build a cathode materials manufacturing plant in the US state of Tennessee that is to be the largest production facility in the all-important electric vehicle market.

LG Chem Vice President Shin Hak-cheol, Tennessee Gov. Bill Lee, Stuart McWhorter, commissioner at the Tennessee Department of Economic and Community Development, Cho Hyun-dong, South Korean ambassador to the US, and other company executives and government officials participated in the groundbreaking ceremony on Tuesday.

The company said it invested 2 trillion won ($1.54 billion) for the first-phase construction project of its first US production base. The plant’s annual capacity is projected to be 60,000 tons, which would be enough for 600,000 high-performance electric vehicles with a driving range of up to 500 kilometers.

From 2026, the facility will produce nickel, cobalt, manganese and aluminum cathode materials, consisting of 90 percent nickel and boasting high stability levels with aluminum composite.

LG Chem plans to diversify its product portfolio with next-generation cathode and expand production depending on demand from corporate clients, including automakers.

The materials manufacturer has forged a partnership with General Motors to supply 950,000 tons of cathode materials in 2022. It also secured a supply deal worth 2.9 trillion won with Toyota in October this year.

The company touted that the Tennessee plant, located in the central-eastern US, is in proximity to its clients within the country as well as import bases for raw materials, adding that it will facilitate communications with customers and offer products tailored to their needs.

“With the US production base, we will make best efforts to make our clients qualify for EV subsidies following the Inflation Reduction Act,” it said.

The facility looks to set up a stable supply chain by sourcing minerals and materials from countries that have free trade agreements with the US. For example, it will use precursor materials made by Korea Precursor Company, a joint venture between LG Chem and Korea Zinc, in Ulsan.

It also aims to secure 10,000 tons of annual capacity per production line with a world-class manufacturing technology that includes an advanced sintering process that forms a solid mass through heat and pressure. Smart factory technology will be applied to the facility to set up manufacturing automation and quality analysis and control systems.

As for sustainability efforts, the company is in talks with a battery recycling firm within the US for a materials supply deal. The plant will also be powered by 100 percent renewable energy, including solar panels and hydroelectric power.

“LG Chem will offer more value to customers and become the No. 1 cathode materials manufacturer in North America through our Tennessee plant,” said Shin, in a statement. “The company will build a stable battery materials value chain that can endure any (challenging) circumstances and fulfill our vision as the world’s best battery materials company.”

Last year, LG Chem vowed to diversify its business portfolio that relies on petrol chemicals business and expand its sales revenue in battery materials from 5 trillion won to 20 trillion won by 2027, and to 30 trillion won by 2030.