Hyunjoo Jin, Heekyong Yang

SAN FRANCISCO/SEOUL -LG Energy Solution, a supplier of electric cars Tesla (NASDAQ:), and Lucid in Korea, announced on Thursday that it will invest 1.7 trillion Korean won (1.4 billion USD) in Arizona to construct a factory to produce batteries for “prominent startups” as well as other North American customers.

LGES stated that this will be the first U.S. plant to produce cylindrical cells. This type of battery is used in Tesla’s and Lucid cars. LGES released a statement saying that construction work will commence in the first quarter of 2022. Mass production will be started in 2024, and have a production capacity of 11.2 gigawatt hours.

Reuters had reported earlier that potential customers included EV maker Tesla, Lucid and Proterra and Philip Morris, (NYSE:), which makes IQOS heated-tobacco stick among other things. According to the report, people who were familiar with this matter are cited.

LGES stated in a statement, that they plan to look into securing more production capacity for their Arizona plant in the near future.

LGES officials stated that the Arizona plant could have additional production capabilities as there is growing demand from customers for cylindrical batteries, such as automakers and power tools makers.

Elon Musk, Tesla chief executive officer, stated on Tuesday that the battery supply would “be the limiting factor” to vehicle production over the next two or three years. Elon Musk has asked suppliers for more production while Tesla makes its own cells.

Proterra, Lucid, and Tesla did not respond immediately to our requests. Philip Morris refused to comment.

Japan’s Panasonic Corp (OTC) Corp and Contemporary Amperex Technology Co Ltd have been reported by NHK this month that they are looking to spend billions to construct a factory in order to manufacture a new electric vehicle (EV) for Tesla.

NHK reported that Panasonic plans to build the plant in Oklahoma or Kansas. It is not far from Tesla’s Texas new vehicle plant.

Sherry House, Lucid’s Chief Financial Officer, told Reuters that the company has signed multi-year supply deals with two suppliers of batteries. The agreement also includes some capacity from state-side cells.

The companies were not identified by her. Lucid purchases batteries from LGES (KS:), Samsung (SDI).

LGES raised over $10 billion during its January Korean public offer. In that time, it announced a flurry battery joint ventures, including one with GM in the United States, and Stellantis Canada.

The executive order was signed by Joe Biden, the U.S. president. It aims to make half of new cars sold in 2030 electrical.