Stocks fall sharply as Target’s woes renew inflation fears

General Motors, partner to build plant to process EV battery materials

Jordyn Grzelewski
The Detroit News

General Motors Co. on Wednesday announced plans to form a joint venture with South Korean company Posco Chemical to build a North American processing facility for key materials needed for electric vehicle batteries.

The joint venture will process cathode active material for GM's Ultium electric vehicle platform. The automaker, with joint-venture partner LG Energy Solution, currently is building two Ultium battery cell plants in Lordstown, Ohio, and Spring Hill, Tennessee, with plans to build two more at to-be-announced locations in the United States.

GM executives cast the initiative as yet another step in a broader effort by the Detroit company to shore up its domestic EV supply chain as it competes for leadership in the EV market and spurs mainstream adoption of plug-in vehicles.

“Our work with POSCO Chemical is a key part of our strategy to rapidly scale U.S. EV production and drive innovation in battery performance, quality and cost,” Doug Parks, GM's executive vice president of global product development, purchasing and supply chain, said in a statement. "We are building a sustainable and resilient North America-focused supply chain for EVs covering the entire ecosystem from raw materials to battery cell manufacturing and recycling.”

GM and Posco have signed a non-binding term sheet and said they expect to sign definitive agreements soon. After the deal closes, they expect to make a site selection announcement for the new plant as early as the first quarter of 2022. The facility, which GM said is expected to employ hundreds, is slated to open in 2024.

GM officials declined to comment on the structure or financing of the JV, saying more details would follow the signing of a definitive agreement. But Parks characterized it as "a significant investment by both companies, both in dollars and strategically, because the cathode is the energy source of the lithium-ion battery. It has the greatest impact on battery performance, safety and price."

“We are very pleased to participate in the global battery supply chain project with General Motors,” Kyungzoon Min, POSCO Chemical CEO, said in a statement. "Through close partnership, we will innovate battery materials and contribute to accelerate the adoption of EVs based on our world-class product development, mass production capacity, and raw materials competitiveness.”

GM has previously said that it aims to field an emissions-free lineup by 2035. It plans to have 1 million EVs on the road globally by 2025. The Detroit automaker has committed to investing $35 billion on electric and autonomous vehicle development by mid-decade, and plans to introduce 30 electric models globally — two-thirds of which will be available in North America — in that timeframe.

Its Ultium platform will support, among other vehicles, an unnamed electric Chevrolet crossover priced around $30,000, as well as Buick crossovers and trucks from Chevrolet and GMC. Deliveries of the GMC Hummer EV truck are slated to begin this month, followed by the electric Cadillac Lyriq crossover next year. The automaker is also planning a Hummer EV SUV and an electric Silverado pickup.

Parks said Wednesday that GM expects that "the majority of the Ultium platform will be sourced, process or manufactured in North America by 2025."

Automakers increasingly are moving to localize their supply chains not only to secure them, but because the current model of shipping materials and components back and forth across continents goes against the sustainability targets they're attempting to meet with the transition to electric vehicles, experts say.

"As they onshore most of the other parts of the battery supply chain, it makes sense to form this partnership with Posco and put in the production capacity here in North America, to make sure they have supplies," said Sam Abuelsamid, principal analyst leading e-mobility research at Guidehouse Insights.

"Because if you’re going to source as much of the material as you can in North America, it doesn’t make sense to extract lithium and nickel and whatever other material you can get here, ship them to Asia to be processed and then bring them back again."

“I expect," he added, "that pretty much every OEM is going to be making similar moves over the next couple of years."

This is just the latest step GM has taken to secure various parts of its EV supply chain. Other examples include its joint venture with LG to build battery cells as well as an agreement with Canadian company Li-Cycle Corp. to recycle up to 100% of the material scrap from battery cell manufacturing.

Parks said GM expects the facility to have the capacity to supply most, if not all, of the cathode anode material for the four Ultium Cells LLC battery plants plants.

The facility's focus, GM officials said, will be processing materials for the nickel-cobalt-manganese-aluminum batteries that represent Ultium's first generation chemistry, though GM eventually would like to reduce the amount of cobalt it uses.

"We're going to start with Ultium and the NCMA chemistry, and then we will advance as we go forward as quick as possible to improve either the performance or the cost of the battery," said Parks.

Parks said the circumstances over the last year — such as nagging supply-chain issues and GM's recall of its electric Chevrolet Bolt over a battery fire risk tied to batteries from supplier LG Electronics Inc. — did not necessarily prompt the automaker to change direction. Still, he acknowledged the events "reinforced" the company's decisions around becoming more vertically integrated.

Executives also pitched the initiative as one that would give GM greater control over production, and thus enable it to align it better with consumer demand as the appetite for EVs grows.

“That relationship with Posco is going to allow us to have more control and continue to invest and grow that," GM Chief Financial Officer Paul Jacobson said at a Credit Suisse event Wednesday, "so that active material can keep up with what we need to do on cell production."

jgrzelewski@detroitnews.com

Twitter: @JGrzelewski