When growth in electric vehicle sales was at its peak, and the curve was expected to last, several manufacturers, including General Motors (GM), planned accordingly. With this anticipated growth slowing, some are scaling back their plans.
This is the case at GM where the company estimates that it will not need the four battery factories that it believed necessary to meet demand. Consequently, it decided to sell its stake in one of them, precisely to its joint venture partner, LG Energy Solution.
At the start of 2024, GM had a single Ultium factory operational, opening in September 2022. This explains why the arrival of the brand's electric models was happening practically in dribs and drabs. A second began operation last March, and a third was planned to do so soon. She is the one who is “sacrificed” by the company.
The Ultium Cells factory, currently under construction near Lansing, Michigan, will therefore be 100% owned by LG and will supply a manufacturer other than GM. The American giant and LG had started building the place in 2022 and planned to open it in the coming months.
GM said it expected to fully recoup its $2.6 billion investment in the “nearly completed” plant. The plan is located near the Delta Township assembly plant that makes the Chevrolet Traverse and Buick Enclave.
Le Chevrolet Silverado EV | Photo : Chevrolet
GM's investment so far amounts to about $1 billion, a person familiar with the matter told Automotive News (which reported the news).
“Our electric vehicle profitability is rapidly improving, in part due to our strategic decision to manufacture battery cells in the United States with LG Energy Solution. It will be years before some of our competitors approach this level of performance,” said Paul Jacobson, GM’s chief financial officer, via a statement shared on December 2.
He added this. “We believe we have the right cells and manufacturing capabilities to expand with the electric vehicle market in a capital efficient manner. Once completed, this transaction will also help LG Energy Solution meet demand by leveraging capacity that is almost ready for use, and it will make GM even more efficient.”
A win-win solution, as the expression goes. At least that is the case considering the current situation.
It should be noted that this decision does not affect GM's stake in Ultium Cells or its partnership with LG to operate battery factories in Warren, Ohio, as well as Spring Hill, Tennessee. GM also plans to open a battery plant in New Carlisle, India, with Samsung SDI. She was the fourth, and will eventually become the third.
GM and LG also said they have extended their partnership to co-development of prismatic battery cells. These are designed to be lighter and less expensive than cells made in Ohio and Tennessee.
The Cadillac Lyriq | Photo : D.Boshouwers
