GM and LG agree $2.3 billion partnership to mass-produce car battery cells

General Motors and LG Chem have agreed a partnership to mass-produce battery cells for future electric vehicles.

Together, the companies will invest up to a total of $2.3 billion through a new, equally owned joint venture company.

The joint venture will establish a battery cell assembly plant on a greenfield manufacturing site in the Lordstown area of Northeast Ohio that will create more than 1,100 new jobs.

GM says the “state-of-the art plant” will use the most advanced manufacturing processes all under one roof to produce cells efficiently, with little waste, and will benefit from strong economies of scale throughout the value chain.

The plant will be “extremely flexible” and able to adapt to ongoing advances in technology and materials.

The collaboration also includes a joint development agreement that brings together two leaders in battery science to develop and produce advanced battery technologies, with the goal of reducing battery costs to industry-leading levels.

This partnership, along with the recent sale of GM’s manufacturing complex in Lordstown, Ohio to Lordstown Motors for the production of battery-electric trucks, positions Northeast Ohio and the Mahoning Valley as a major hub for technology and electric vehicle manufacturing.

GM chairman and CEO Mary Barra, says: “With this investment, Ohio and its highly capable workforce will play a key role in our journey toward a world with zero emissions.

“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.”

In addition to vertically integrating the manufacturing of battery cells in the US, LG Chem will gain access to an experienced workforce.

It will also benefit from a dedicated production stream of future electric vehicles from GM’s next generation of battery-electric vehicles, including an all-new battery-electric truck coming in the fall of 2021.

Hak-Cheol Shin, LG Chem vice chairman and CEO, says: “Our joint venture with the number-one 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.

“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.”

This investment builds on GM’s $28 million investment in its Warren, Michigan battery lab announced late last year.

It is also in addition to manufacturing investments in Ohio announced earlier this year totaling approximately $700 million that will create about 450 jobs in Toledo, Parma and Brookville, Ohio.

Groundbreaking is expected to take place in mid-2020.

Commenting on the GM-LG partnership, Christopher Robinson, Lux Research senior analyst, says: “The location and size of the announcement are unsurprising: 30 GWh is roughly the size of other large battery manufacturing facilities, and citing it near vehicle assembly reduces transportation costs.

“What is significant about the announcement is that GM is forming a joint venture with a supplier and owning a share of battery production.

“Competitors Nissan divested in their cell manufacturing ownership, and most other OEMs will make their own pack but purchase cells from suppliers, while VW is pursuing cell manufacturing through a low-risk engagement with startup Northvolt.

“Automakers may want more control over their supply chain and differentiation, and it won’t be surprising if more OEMs take larger ownership of cell production.”

Main picture: Illustration of the Cadillac EV