By Mike Colias
General Motors Co. and South Korea's LG Chem plan to build a
large battery factory in Ohio, the latest example of an auto maker
plowing money into the development of electric cars.
The new plant would be among the world's biggest producing
battery cells for electric cars, rivaling Tesla Inc.'s Gigafactory
in the Nevada desert. GM and the LG Corp. subsidiary said Thursday
they would invest a combined $2.3 billion in the joint venture.
Auto makers have been joining forces with battery makers as they
gear up to spend about $225 billion to develop new electric-vehicle
models over the next several years, according to consulting firm
AlixPartners LP. Tightening fuel-efficiency and emissions
regulations, especially in China and Europe, are prompting auto
makers to electrify their vehicle lineups.
The GM-LG factory would be built near Lordstown, Ohio, where GM
last spring closed a vehicle-assembly plant that in recent years
employed roughly 4,000 workers. A startup company has acquired that
facility, where it plans to make electric trucks.
GM said the new battery plant, which would employ more than
1,100 workers, would be among the world's largest battery-cell
factories, with capacity to manufacture enough batteries annually
to produce more than 30 gigawatt hours.
Tesla Chief Executive Elon Musk said this spring that the
company's Gigafactory in Nevada has a theoretical capacity for 35
gigawatt hours, but constraints from battery partner Panasonic
Corp. of Japan have limited output to about 24 gigawatt hours.
GM and LG Chem will co-develop and assemble battery cells to be
used in the auto maker's electric vehicles, including a
battery-powered truck GM plans to introduce in the fall of
2021.
Construction of the factory is expected to begin in
mid-2020.
The Wall Street Journal this fall reported that GM was planning
to invest in a joint-venture battery plant in the Lordstown area.
GM discussed the project with United Auto Workers officials during
contract talks as a way to blunt the impact of the Lordstown
factory's closure.
Though not part of the labor contract, GM and the union had
discussed pay in a range of $15 to $17 an hour, in line with wages
at other battery plants, people familiar with the matter have
said.
The company said Thursday it will be up to the workers to decide
whether they want to unionize. The UAW didn't have an immediate
comment.
Union officials have expressed concern that the expansion of
electric vehicles poses a long-term threat to auto-factory
employment, because they require less manpower to produce than
gasoline-powered cars.
Battery-cell plants are highly automated and require different
skills than those needed at traditional car factories, said Menahem
Anderman, a California-based battery consultant. The plants'
employees include test technicians, computer programmers and
equipment engineers.
Car companies generally have contracted with suppliers such as
LG Chem for the lithium-ion cells that go into large battery packs
for use in electric vehicles. Lately, though, the auto makers have
been forging closer ties with battery companies to lower costs and
secure future battery supplies.
Volkswagen AG said in June it will spend $1 billion on battery
production, including a joint-venture investment with a Swedish
startup. Toyota Motor Corp. signed a battery-production joint
venture with Panasonic in January.
Mr. Anderman said by pooling their investment in the Ohio plant,
GM and LG are hedging their bets on the U.S. electric-vehicle
market, which is expected to develop more slowly than in Europe and
China.
GM Chief Executive Mary Barra said the joint venture with LG
will speed GM's electric-vehicle development and reduce costs.
"The new facility will help us scale production and dramatically
enhance EV profitability and affordability," Ms. Barra told
reporters Thursday.
Analysts say the supply of lithium-ion batteries could be
constrained in coming years as more electric models hit showrooms,
prompting car companies to lock in supply contracts.
Despite Toyota's Panasonic joint venture and the car maker's
partnership with Chinese battery giant Contemporary Amperex
Technology Co., the Japanese auto giant is still finding it hard to
build enough batteries to keep up with rising demand for hybrids,
which use a combination of gasoline and battery power.
"We can assemble the cars," said Bob Carter, Toyota's North
American sales chief, in an interview Thursday. "The assembly is
not the bottleneck. It's the battery itself."
GM plans to introduce at least 20 electric models globally by
2023. Many of those will be for the China market, where the
government has put manufacturer quotas on sales of vehicles that
don't produce tailpipe emissions.
LG Chem supplies the cells that go into the Chevrolet Bolt, a
small electric car that GM introduced in 2016 as a potential
competitor for Tesla's Model 3. Both cars were billed as the
industry's first attempts at a relatively affordable vehicle with a
range of more than 200 miles on a single charge.
--Ben Foldy and Tim Higgins contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
December 05, 2019 17:35 ET (22:35 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
General Motors (NYSE:GM)
Historical Stock Chart
From Aug 2024 to Sep 2024
General Motors (NYSE:GM)
Historical Stock Chart
From Sep 2023 to Sep 2024