GM, LG to Spend $2.3 Billion on Venture to Make Electric-Car Batteries -- Update
December 05 2019 - 11:17AM
Dow Jones News
By Mike Colias
General Motors Co. and South Korea's LG Chem plan to jointly
build a large battery-cell factory in Ohio, the latest example of
auto makers plowing money into the development of electric
cars.
GM and LG said Thursday they will invest a combined $2.3 billion
in a 50-50 joint venture. The companies will co-develop and
assemble battery cells to be used in GM electric vehicles in coming
years, including a battery-powered truck that GM plans to introduce
in the fall of 2021.
Auto makers have been partnering with and investing in battery
makers as they gear up to spend around $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 prodding
auto makers to electrify their vehicle lineups.
The GM-LG factory will be built near Lordstown, Ohio, where GM
last spring closed a large vehicle assembly plant that in recent
years had 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 will employ more than 1,100
workers. Construction on the factory is expected to begin in
mid-2020.
The Wall Street Journal this fall reported that GM planned to
invest in a joint-venture battery plant in the Lordstown area. GM
discussed the project with United Auto Worker officials during
contract talks as a way to blunt the impact of the Lordstown
factory's closure. The company said Thursday it will be up to the
workers once in place to decide whether they want to unionize.
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. Auto makers have been forging closer
ties with battery makers lately, seeking to lower cost 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. Tesla Inc.'s massive, Gigafactory battery plant in the
Nevada desert is in partnership with Japan's Panasonic Corp.
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.
The companies said the joint venture would drive down the cost
of electric-vehicle batteries to "industry-leading levels." GM said
the plant would be among the world's largest battery-cell
factories.
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.
Bolt sales totaled about 13,000 through the first three quarters
of this year, compared with about 67,000 Model 3 sales, according
to the Automotive News Data Center. GM has said it would introduce
a second Chevy electric vehicle for the U.S., based on the Bolt's
mechanical layout.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
December 05, 2019 11:02 ET (16:02 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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