GM General Motors Company

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.