GM Partners With LG Chem In New Joint Venture To Supply Batteries For Electric Trucks

Batteries

Published on December 5th, 2019 |
by Kyle Field

GM Partners With LG Chem In New Joint Venture To Supply Batteries For Electric Trucks

December 5th, 2019 by Kyle Field

General Motors and LG Chem are establishing a new joint venture to build battery cells at scale in the US. The new JV puts both companies on equal footing and will kick off with the construction of a new 30 GWh battery cell plant in northeastern Ohio that will create more than 1,100 new jobs.

The new joint venture will break ground on the facility next year that, when at its full 30 GWh capacity, will rival the current battery cell capacity of Tesla and Panasonic’s Gigafactory 1 in Nevada. That’s enough to produce more than 450,000 of the company’s 66 kWh Chevy Bolts per year, though the cells will realistically be spread across GM’s newer plug-in vehicles.

GM is following Tesla’s early lead on this on by partnering with a battery cell manufacturer instead of contracting it out. Batteries are the most expensive single component in an electric vehicle and GM has seen how that plays out at lower volumes with the Chevy Bolt. Looking to scale that up, GM and LG are now joining forces in a push to “reduce battery costs significantly — to industry-leading levels.”

Battery cells coming out of the new battery factory will feed GM’s new line of yet-to-be-unveiled electric trucks and other electrified vehicles in the GM family. GM is clearly behind the eight ball when it comes to electric vehicles, having abandoned its early entrance into the market with the EV1 back in the 90s in favor of more profitable internal combustion trucks and SUVs. Two decades later, it is GM playing catch up to startups Tesla and Rivian in the electric truck space as the industry’s realization is that the key to electric vehicles is not automotive manufacturing, but in battery cell production.

Hopping in bed with LG builds on GM’s partnership with the firm in prior electric vehicle pursuits including most notably, the Chevy Bolt. The compact electric vehicle was rushed to market by GM in a push to beat the Tesla Model 3 into the “affordable” $30,000 electric vehicle market. To develop and deliver the vehicle on such an unprecedented timeline, GM and Chevy leaned heavily on LG. A fully 54% of the components in the vehicle are sourced directly from LG’s home country of Korea, leaving a dismal 26% of the components coming from the US and Canada.

The JV makes General Motors “the first full-line automaker to manufacture battery cells in the United States” which feels a bit like splitting hairs as the company is clearly not leading in the fully electric or even the electrified vehicle space today. Hey, whatever helps you sleep at night. Longer term, GM has plans for 20 new electrified vehicles to fill the void left by the cancelled Chevy Volt PHEV and complementing the Chevy Bolt.

Whether this is done to meet fuel economy standards, to greenwash the brand, or to turn the behemoth that is GM towards electric vehicles as quickly as possible to truly make an impact on climate change, it is exciting to see this first step. The JV announcement is capped off with a very clear message about climate change:

“Climate change is real. That is indisputable and we take the challenges it presents seriously. The transportation sector must be part of any credible solution and lower battery costs will be a game-changer for EV profitability and affordability.” – GM CEO Mary Barra

By the time this factory breaks ground, Tesla will have broken ground on its fourth Gigafactory in Berlin, Germany. Who knows what the landscape will look like by the time GM and LG Chem’s new factory is churning out battery cells at scale. If GM wants to be competitive in the electric vehicle market, it is going to have to move even faster.

CEO Mary Barra’s language in the announcement of the new JV is encouraging: “Our approach to EV adoption is holistic, and we are moving fast.” It is easy to talk about moving fast, but insanely difficult to actually do it. I’m personally hoping that this new battery cell plant in Ohio is just the first in a long string of announcements as GM takes steps to build out the battery cell production backbone it will need to compete with the other titans in the space.

Images courtesy: GM | Source: GM

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About the Author

Kyle Field I'm a tech geek passionately in search of actionable ways to reduce the negative impact my life has on the planet, save money and reduce stress. Live intentionally, make conscious decisions, love more, act responsibly, play. The more you know, the less you need. TSLA investor.

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