When electric vehicle sales growth was at its peak, and the curve was expected to last, many automakers, including General Motors (GM), planned accordingly. As this anticipated growth has slowed, some are revising their plans in accordance.
General Motors is evidently estimating it won't need the four battery plants it thought it would need to meet demand. The automaker is selling its stake in one of them to its joint venture partner, LG Energy Solution.
At the beginning of 2024, GM had only one Ultium plant in operation, opened in September 2022. This explains why the arrival of the brand's electric models was virtually piecemeal. A second went into operation this past March, and a third is scheduled to do so soon. This is the plant the company is divesting itself of.
The Ultium Cells plant, currently under construction near Lansing, Michigan, will thus be 100-percent owned by LG and supply a manufacturer other than GM. The American carmaker and LG started building the facility in 2022, with plans to open it in the coming months.
GM said it expects to fully recoup its investment in the “nearly completed” plant, amounting to $2.6 billion. The factory is located near the Delta Township assembly plant, which manufactures the Chevrolet Traverse and Buick Enclave.
GM's investment so far amounts to around $1 billion, a person familiar with the matter told Automotive News.
“Our EV profitability is rapidly improving thanks in part to our strategic decision to build battery cells in the U.S. with LG Energy Solution. It will be years before some of our competitors approach this level of performance,” said Paul Jacobson, GM's CFO, via a statement shared on December 2.
He added that the company believes it has “the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner. When completed, this transaction will also help LG Energy Solution meet demand by leveraging capacity that’s nearly ready to come online and it will make GM even more efficient.”
A win-win solution, as the saying goes. At least, that's the case considering the current situation.
The decision to divest does not affect GM's stake in Ultium Cells, nor its partnership with LG to operate battery plants in Warren, Ohio, and Spring Hill, Tennessee. GM also plans to open a battery plant in New Carlisle, India, with Samsung SDI. This was to be the fourth EV battery plant scheduled – it will now become the third.
GM and LG also announced they have extended their partnership to co-develop prismatic battery cells. These are designed to be lighter and less expensive than the type of cells made in Ohio and Tennessee.
