Seoul, South Korea – LG Energy Solution, a South Korean battery manufacturer, is set to acquire General Motors' (GM) stake in a US battery plant, a move seen as a strategic play to strengthen its foothold in the North American electric vehicle market amid growing US-China tensions.
GM announced on Tuesday that it would sell its share in the Ultium Cells battery plant, currently under construction in Lansing, Michigan, to its joint venture partner, LG Energy Solution. LG Energy Solution confirmed the news, stating that the acquisition is being considered to enhance the efficiency of its North American operations and maximize production capacity.
The two companies are currently negotiating the specifics of the deal. Once finalized, LG Energy Solution plans to use the plant as a key production hub in North America. Toyota is considered a strong candidate to receive battery supplies from the plant, given the existing supply agreement between the two companies.
The decision to sell GM's stake comes amid changing market dynamics in the electric vehicle industry. The global electric vehicle market is currently experiencing a slowdown, coupled with increased competition from Chinese manufacturers. As a result, global automakers are adjusting their electric vehicle production targets.
GM had previously lowered its annual electric vehicle production target from 200,000-300,000 units to 200,000-250,000 units in June. The company cited a focus on improving the profitability of its electric vehicle business as a reason for the adjustment. Industry analysts believe that the sale of GM's stake is part of this effort to improve profitability.
Reuters reported that GM expects to recover approximately $1 billion from the sale of its stake, which is expected to be completed in the first quarter of next year.
LG Energy Solution and GM's joint venture, Ultium Cells, already operates two battery plants in Ohio and Tennessee. By acquiring the third plant, LG Energy Solution can accelerate its investment and reduce costs compared to building a new facility from scratch. Additionally, as a sole owner, LG Energy Solution can capture 100% of the profits and attract a wider range of customers beyond GM.
On the same day, the two companies announced a joint research and development project for prismatic batteries, which are expected to be used in GM's next-generation electric vehicles. This marks the first time LG Energy Solution has officially announced its development of prismatic batteries. An LG Energy Solution official stated, "With this, we have become the only battery company in the world to have a portfolio of all battery form factors, including pouch, cylindrical, and prismatic."
Prismatic batteries, which are housed in a flat, rectangular aluminum casing, are known for their durability and lower production costs compared to pouch-type batteries. Samsung SDI has been a major supplier of prismatic batteries, but LG Energy Solution and SK On have also entered the market to capitalize on growing demand.
Samsung SDI has secured a $7.54 billion loan from the US government to support the construction and operation of its joint venture with Stellantis, StarPlus Energy, in Indiana. The US Department of Energy stated that the plant will have an annual production capacity of 67 GWh, enough to power 670,000 vehicles, and will help reduce the country's reliance on China for batteries.
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