General Motors & LG Chem Are Investing up to $2.3 Billion in New EV Battery Joint Venture

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【Summary】U.S. automaker General Motors today announced it is forming a new joint venture (JV) with South Korean battery maker LG Chem to mass-produce battery cells for GM’s future battery-electric vehicles.

Eric Walz    Jan 11, 2020 10:50 AM PT
General Motors & LG Chem Are Investing up to $2.3 Billion in New EV Battery Joint Venture
GM is working on a fully-electric Cadillac SUV

As the auto industry transitions to building more electric vehicles, lithium-ion batteries are becoming the "new oil" and global automakers are racing to ensure they have a steady supply of batteries for their future EVs by forming partnerships with Asian battery suppliers.

U.S. automaker General Motors today announced it is forming a new joint venture (JV) with South Korean battery maker LG Chem to mass-produce battery cells for GM's future battery-electric vehicles. The two companies will invest up to $2.3 billion through a new, equally owned joint venture company.

LG Chem is currently the battery supplier for GM's Chevy Bolt EV.

The JV will establish a U.S. battery cell assembly plant in Northeast Ohio that will create more than 1,100 new jobs, bringing back some of the jobs lost when GM shuttered its nearby Lordstown assembly plant after automaker ended production of the Chevy Cruze sedan.

LG Chem is one of the world's biggest suppliers of EV batteries to the auto industry, along with South Korea-based Samsung, Panasonic, which is Tesla's battery partner, and China's CATL a supplier to German automaker BMW.

"With this investment, Ohio and its highly capable workforce will play a key role in our journey toward a world with zero emissions," said GM Chairman and CEO Mary Barra. "Combining our manufacturing expertise with LG Chem's leading battery-cell technology will help accelerate our pursuit of an all-electric future. We look forward to collaborating with LG Chem on future cell technologies that will continue to improve the value we deliver to our customers."

The new battery factory will be a state-of-the art facility, using advanced manufacturing processes to produce cells efficiently, with little waste. GM said the plant will be extremely flexible and able to adapt to new advancements in EV battery technology and materials.

Another goal of the partnership is to reduce the costs of batteries through economies of scale. Currently, the high cost of batteries is a major barrier to EV adoption, making electric vehicles more expensive than internal combustion engine models.

The new joint venture near Lordstown will also bring an economic boost to the region that was hit hard after GM's shuttered its Lordstown assembly plant earlier this year. The plant's closure eliminated over 3,000 manufacturing jobs, but now its coming back to life after being purchased by startup Lordstown Motors Corp. for the production of battery-electric trucks.

In addition to vertically integrating the manufacturing of battery cells in the U.S., LG Chem will benefit from a dedicated production stream for GM's next generation of battery-electric vehicles, including for GM's first electric pickup truck coming in the fall of 2021.

"Our joint venture with the No. 1 American automaker will further prepare us for the anticipated growth of the North American EV market, while giving us insights into the broader EV ecosystem," said LG Chem Vice Chairman & CEO Hak-Cheol Shin. "Our long-standing history with General Motors has proven our collective expertise in this space, and we look forward to continuing this drive for zero emissions."

With its new joint venture, GM is following rival Toyota Motor Corp and Tesla in establishing a joint venture to manufacture EV batteries. In January, Toyota and Panasonic announced a new joint venture to develop advanced automotive prismatic batteries for use in electric vehicles. The two companies aims to be operating in 2020.

The joint venture between Toyota and Panasonic includes research, development, production engineering, manufacturing of prismatic lithium-ion batteries, solid-state batteries, and next-generation batteries to be used in future Toyota models.

GM rival Tesla, producing batteries in a partnership with Panasonic at the electric automaker's Nevada gigafactory.

The new joint venture with LG Chem will support GM's push to produce more electric models. The Detroit-based automaker plans to introduce more than 20 fully-electric models by 2023 and jointly owning battery factory will help the automaker achieve its goal.

Groundbreaking on the new facility is expected in mid-2020.

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