GM, LG Chem to invest $2.3 billion in EV battery joint venture

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GM chair­man and CEO Mary Bar­ra said Thurs­day morn­ing that the automak­er is form­ing a joint ven­ture with LG Chem to mass pro­duce bat­tery cells for its elec­tric vehi­cles, a port­fo­lio that will include a new bat­tery-elec­tric truck com­ing in the fall of 2021.

The two com­pa­nies said they will invest up to a total of $2.3 into the new joint ven­ture and will estab­lish a bat­tery cell assem­bly plant on a green­field man­u­fac­tur­ing site in the area of North­east Ohio that will cre­ate more than 1,100 new jobs. Ground­break­ing is expect­ed to take place in mid-2020.

GM has used LG Chem as a lithi­um-ion and elec­tron­ics sup­pli­er for at least a decade. The com­pa­nies began work­ing togeth­er in 2009. The rela­tion­ship deep­ened as GM devel­oped and then launched the Chevy Bolt EV.

How­ev­er, the joint ven­ture a that Bar­ra said in a call with reporters Thurs­day morn­ing would accel­er­ate the automak­er’s abil­i­ty to win in the elec­tric vehi­cle space.

“The joint ven­ture sign­ing is more than just a col­lab­o­ra­tion, it’s the begin­ning of a great jour­ney,” LG Chem CEO and vice chair­man Hak-Che­ol Shin said dur­ing a Thurs­day morn­ing call with reporters.

The ven­ture is sig­nif­i­cant for both com­pa­nies. The new plant will sup­ply GM’s next gen­er­a­tion of elec­tric vehi­cles. Bar­ra said the com­pa­ny is still on track to intro­duce 20 elec­tric vehi­cles glob­al­ly by 2023.

If GM expects to build a prof­itable EV it will have to do more than just bring these vehi­cles to mar­ket. The next gen­er­a­tion of vehi­cles will have a new bat­tery elec­tric vehi­cle archi­tec­ture, will be desir­able, prof­itable with the right range and , Bar­ra not­ed dur­ing the call. “It’s got to be afford­able to dri­ve the vol­ume and dri­ve EVs in the , and cus­tomers are look­ing for afford­abil­i­ty. And so that is the jour­ney we are on and we work­ing with LG is will accel­er­ate that path.”

Mean­while, the deal gives a boost to LG’s bat­tery busi­ness, which Shin said is expect­ed to grow to $25 bil­lion by 2024.

The bat­tery plant will have an annu­al capac­i­ty of more than 30 gigawatt hours with flex­i­bil­i­ty for expan­sion, accord­ing to GM. If suc­cess­ful, the annu­al capac­i­ty at the plant would be close to the same out­put of Tes­la’s mas­sive fac­to­ry near Reno, Nev. Tes­la and Pana­son­ic are part­ners in the mas­sive fac­to­ry that pro­duces elec­tric motors and bat­tery packs. Pana­son­ic makes the cells, which Tes­la then uses to make bat­tery packs for its elec­tric vehi­cles. Tes­la has­n’t shared capac­i­ty num­bers recent­ly, but pre­vi­ous­ly stat­ed plans for it to have a 35 gigawatt-hour capac­i­ty.

The loca­tion of the bat­tery ven­ture could build good­will in Lord­stown, a town that suf­fered from sweep­ing lay­offs after GM decid­ed to stop pro­duc­ing the Chevro­let Cruze at its assem­bly plant there. GM “unal­lo­cat­ed” its Lord­stown plant, a des­ig­na­tion that meant the automak­er would shut­ter the plant. The deci­sion result­ed in the elim­i­na­tion of some 1,200 jobs.

Lord­stown Motors Corp., a bat­tery-elec­tric trans­porta­tion tech­nol­o­gy com­pa­ny, acquired the old GM plant last month.

The comes in addi­tion to GM’s $28 mil­lion invest­ment in its War­ren, Mich. bat­tery lab announced late last year.

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