LG Chem said Wednesday that it will build a joint venture plant in Nanjing, Jiangsu province, China, to produce lithium-ion batteries for electric vehicles by the end of next year.

Officials from South Korea’s largest EV battery maker and Nanjing signed an agreement in Seoul, ahead of Chinese President Xi Jinping’s state visit to Korea.

LG Chem will establish the JV plant with two investment companies from Nanjing ― Nanjing Zijin Technology Incubation Special Park Construction Development and Nanjing New Industrial Investment Group.

The construction for the plant, in which LG will hold a 50 percent stake, will begin in September, and it will commence production of rechargeable batteries for some 100,000 EVs in China at the end of 2015.

The company said the JV plant will manufacture battery cells, modules and packs of cells for global automakers operating in the world’s second-largest economy, which is expected to become the world’s largest EV manufacturing country.

LG Chem noted that it chose Nanjing as its third EV battery manufacturing base as it has experience doing business in the region, having operated a plant there that produces rechargeable batteries for mobile devices.

The Korean company has a factory in Cheongju, North Chungcheong Province, with an annual production capacity of 200,000 EV batteries mostly for Korean and European customers.

In Holland, Michigan, the company produces between 20,000 and 100,000 units for North American automakers.

Also, a number of its affiliates such as LG Electronics and LG Display have a presence in Nanjing with which LG has “friendly relations,” the company said in a press statement.

LG Chem also has secured orders to produce tens of thousands of batteries for Chinese hybrid EV makers such as Qoros and SAIC Motor.

“We aim to become No. 1 globally in 2016 when the EV market is set to take off,” said Kwon Young-soo, president of LG Chem’s battery business, in a statement.

LG Chem’s Nanjing plant seeks to achieve 1 trillion won ($990 million) in sales by 2020, by which time the global EV battery market is expected to grow more than fivefold to reach $18.2 billion, according to market researcher B3.

By Park Hyong-ki (hkp@heraldcorp.com)