LG Energy Solution said Friday it would build a $5.5 billion factory in Arizona with an annual capacity of 43 GWh of vehicle and stationary batteries.

Construction of the Queen Creek facility is expected to start later this year. It is part of a rapid production buildout by the South Korean company, which has said it plans to expand its global production capacity by 300 GWh in 2023.

LGES is planning, building or operating manufacturing facilities in Michigan, Ohio, Tennessee and Ontario, either alone or in joint ventures with automakers GM, Honda and Stellantis.

The LGES announcement Friday came a year to the day after the company initially announced it would build a factory in Queen Creek, Ariz.

But the plan announced March 24, 2022, had a construction price tag and annual output only about one quarter as large as the revised plan. And in June 2022 — as inflation was soaring and the South Korean Won had reached a decade-plus low against the U.S. Dollar — LGES appeared to be hesitating on its construction. The company told Reuters it was reassessing its plans in Arizona.

The economic landscape changed radically in August 2022, when Congress passed the Inflation Reduction Act, which creates incentives for American consumers to buy electric vehicles with American-made components and incentives for manufacturers to build those components in the U.S.

In its announcement Friday, LGES cited the rising demand from EV manufacturers for domestically produced batteries.

“Our decision to invest in Arizona demonstrates our strategic initiative to continue expanding our global production network, which is already the largest in the world, to further advance our innovative and top-quality products in scale and with speed,” CEO Youngsoo Kwon said. “We believe it’s the right move at the right time in order to empower clean energy transition in the U.S.”

LGES called it the largest single investment ever for a standalone battery manufacturing facility in North America.

It will comprise two factories.

One will build cylindrical batteries for EVs, is targeted to begin production in 2025 and will have an output capacity of 27 GWh per year.

The other will build pouch-type lithium iron phosphate batteries for energy storage systems (ESS), begin production in 2026 and have a designed capacity of 16 GWh per year. LGES said it would be the first ESS-exclusive factory in the world.

LGES also has manufacturing facilities in China, Indonesia, Poland and South Korea. It said in the news release that expanding its presence in the U.S. would allow it to decrease logistics costs and improve partnerships with its customers in both the EV and ESS sectors.

Other companies have announced plans for battery factories north and west of Arizona.

EV manufacturer Tesla earlier this year said it would invest $3.6 billion in production facilities in Nevada, including a new battery factory and a heavy-duty truck factory. (See Tesla to Invest $3.6B in Nev. Truck, Battery Factories.)

And Statevolt is pursuing development of a 54-GWh battery plant in Southern California, near the lithium deposits in the Salton Sea area. (See 54 GWh EV Battery Plant Proposed for Lithium Valley.)