GM and LG to spend $ 2.three billion on second US EV battery plant

Mary Barra, CEO and chairman of GM, speaks during an “EV Day” on March 4, 2020 at the company’s technology and design campus in Warren, Michigan, a suburb of Detroit

GM

General Motors and LG Chem from South Korea will more than invest US $ 2.3 billion in a second US battery cell plant for electric vehicles in Tennessee, the companies announced on Friday.

The plant for the joint venture Ultium Cells LLC is set to support production of the upcoming Cadillac Lyriq crossover and other future GM electric vehicles at a nearby assembly plant.

Battery cell supply and production is critical for automakers moving to electric vehicles. The joint venture for the new Lordstown, Ohio facility underscores this while the first is still under construction.

Construction of the 2.8 million square meter facility will begin immediately. The plant is scheduled to open at the end of 2023 and will create 1,300 jobs, the companies announced.

“The addition of our second brand new Ultium battery cell facility in the US with our joint venture partner LG Energy Solution is another important step towards an all-electric future,” said Mary Barra, CEO of GM, in a press release.

The announcement comes as part of a 100-day review ordered by President Joe Biden of the U.S. Advanced Batteries, Pharmaceuticals, Critical Minerals and Semiconductors supply chain. He ordered the review in the face of an ongoing global semiconductor chip shortage that had a significant impact on U.S. auto production in 2021.

GM confirmed last month that it is evaluating a second facility in the US to use LG to manufacture battery cells for electric vehicles. Reuters reported details of the announcement on Wednesday.

Jong Hyun Kim, president and CEO of LG Energy Solution, said the new facility will enable companies to “build solid and stable supply chains in the US that enable everything from research, product development and manufacturing to sourcing raw components.”

Some analysts, particularly Adam Jonas of Morgan Stanley, have warned of a potential shortage due to cell capacity compared to the amount of new electric vehicles expected to hit the market in the coming years.

“We believe GM’s establishment of Ultium / Ultium Cells LLC will prove to be a critical point in the strategic differentiation that will ultimately drive value for shareholders,” he said in a statement to investors on Wednesday.

Ultium is GM’s next-generation battery and platform, slated to debut in the GMC Hummer EV pickup truck this year. The first vehicles are not expected to contain Ultium battery cells from the Ohio facility under construction.

An undated flyer photo shows the new Cadillac Lyriq, one of the electric vehicles General Motors Co said the Spring Hill, Tennessee plant will begin production on Oct. 20, 2020.

General Motors Co. | Reuters

GM is expected to continue building or converting facilities in the US to become an electric-only automaker by 2035. That includes at least 30 new electric vehicles by 2025 as part of a $ 27 billion investment in electric and autonomous vehicles over that period.

Most batteries like semiconductors are made in Asia and Europe. Tesla operates a huge battery and cell manufacturing facility with Panasonic in Nevada. Tesla announced in September that it had started producing its own cells at a pilot facility in Fremont, California.

GM and LG first announced the joint venture in December 2019.