General Motors is teaming up with supplier LG Chem to form a new joint venture that will see them invest “up to” $2.3 billion to produce batteries for GM’s planned wave of battery-electric vehicles.
The project will get underway with the construction of a new lithium-ion battery plant in Lordstown, Ohio, near the site of the assembly plant GM closed earlier this year. The factory will be a “critical” piece in the automaker’s effort to bring to market battery-cars that can meet consumer expectations in terms of price and range, said GM CEO Mary Barra during a Thursday morning news conference.
“Combining our manufacturing expertise with LG Chem’s leading battery-cell technology will help accelerate our pursuit of an all-electric future,” said Barra, noting that the automaker is “on target” for meeting a goal of having 20 all-electric vehicles in production by 2023.
Currently, GM just produces one long-range battery-electric vehicle, or BEV, the Chevrolet Bolt. The next in line will be a Cadillac SUV set to reach market next autumn. The ramp-up will quickly accelerate after that launch, Rick Spina, head of GM’s EV operations, told TheDetroitBureau.com in an interview last week.
LG Chem is already providing batteries to GM for a number of vehicles, including the Bolt, through an operation in Michigan. The new facility, which is expected to create about 1,100 new jobs, will be essential to meeting the increased demand for batteries that will come with the expansion of the GM product portfolio, said Barra. In the process, that also will have a “significant impact” on driving down costs, the GM CEO stressed.
GM isn’t the only automaker partnering up to produce its own batteries. Tesla produces its own batteries at its Gigafactory near Reno, Nevada. The plant is 10 million square feet on 3,200 acres and produces the batteries for its three vehicles. However, the company just completed its newest Gigafactory in Shanghai and revealed it will build another near Berlin, Germany.
Lithium-ion battery prices have tumbled sharply since the beginning of the decade, when GM launched the Chevrolet Volt, the world’s first mass-market plug-in hybrid. The battery used in that vehicle ran around $1,000 a kilowatt-hour. According to GM President Mark Reuss, the batteries for the all-electric Bolt cost around $145. In a vehicle with about 60 kWh of cells, that is a substantial savings and moves things closer to the point where BEV prices will be on par with comparable models using an internal combustion engine.
GM officials previously indicated that cost parity will require dropping below $100 per kWh – with some experts setting the price closer to $70. Barra declined to say whether the new joint venture will get GM to that goal, but broadly suggested it will reach target.
Specific details, such as the capacity of the plant, were not revealed. But GM said it expects the facility to be able to supply its battery needs for all the BEV models it plans to bring out in North America – at least in the near-term. Eventually, Barra noted, battery-electric cars are expected to gain a major share of the market and that would likely require additional facilities.
Also unclear is whether the new plant might eventually supply other manufacturers with batteries. That won’t happen initially, said Barra, but longer-term, “We’ll do what’s right for the JV” which will operate as a separate corporate entity.
The decision to locate the battery factory near GM’s now-abandoned Lordstown assembly plant was clearly not a coincidence. The automaker has taken numerous hits over its decision to close the operation there, among other things from President Donald Trump.
GM has offered jobs to all workers displaced by that closing, Barra noted. As a separate company, meanwhile, the new battery plant will not immediately offer spots to displaced GM workers. They will have to apply like anyone else. Barra also indicated the new facility won’t immediately unionize, stressing that will be up to its future workforce.
The size of the investment in the new joint venture suggests that the new plant will serve a similar role to the Reno, Nevada-based Gigaactory run by Tesla, now the country’s largest producer of BEVs. GM has said its own goal is to become the “leader” in battery-car production.