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GM chairman and CEO Mary Barra said Thursday morning that the automaker is forming a joint venture with LG Chem to mass produce battery cells for its electric vehicles, a portfolio that will include a new battery-electric truck coming in the fall of 2021.
The two companies said they will invest up to a total of $2.3 billion into the new joint venture and 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. Groundbreaking is expected to take place in mid-2020.
GM has used LG Chem as a lithium-ion and electronics supplier for at least a decade. The companies began working together in 2009. The relationship deepened as GM developed and then launched the Chevy Bolt EV.
However, the joint venture marks a shift that Barra said in a call with reporters Thursday morning would accelerate the automaker’s ability to win in the electric vehicle space.
“The joint venture signing today is more than just a collaboration, it’s the beginning of a great journey,” LG Chem CEO and vice chairman Hak-Cheol Shin said during a Thursday morning call with reporters.
The venture is significant for both companies. The new plant will supply GM’s next generation of electric vehicles. Barra said the company is still on track to introduce 20 electric vehicles globally by 2023.
If GM expects to build a profitable EV business it will have to do more than just bring these vehicles to market. The next generation of vehicles will have a new battery electric vehicle architecture, will be desirable, profitable with the right range and affordable, Barra noted during the call. “It’s got to be affordable to drive the volume and really drive EVs in the marketplace, and customers are looking for affordability. And so that is the journey we are on and we think working with LG is will accelerate that path.”
Meanwhile, the deal gives a boost to LG’s battery business, which Shin said is expected to grow to $25 billion by 2024.
The battery plant will have an annual capacity of more than 30 gigawatt hours with flexibility for expansion, according to GM. If successful, the annual capacity at the plant would be close to the same output of Tesla’s massive factory near Reno, Nev. Tesla and Panasonic are partners in the massive factory that produces electric motors and battery packs. Panasonic makes the cells, which Tesla then uses to make battery packs for its electric vehicles. Tesla hasn’t shared capacity numbers recently, but previously stated plans for it to have a 35 gigawatt-hour capacity.
The location of the battery venture could build goodwill in Lordstown, a town that suffered from sweeping layoffs after GM decided to stop producing the Chevrolet Cruze at its assembly plant there. GM “unallocated” its Lordstown plant, a designation that meant the automaker would shutter the plant. The decision resulted in the elimination of some 1,200 jobs.
Lordstown Motors Corp., a battery-electric transportation technology company, acquired the old GM plant last month.
The investment comes in addition to GM’s $28 million investment in its Warren, Mich. battery lab announced late last year.