Interface News Reporter | Zhuang Jian
Amid slower than expected growth in the US electric vehicle industry and uncertainty surrounding subsidy policies, General Motors has decided to sell its stake in its US joint venture battery factory.
General Motors announced on December 3rd that its stake in a joint venture battery factory in Lansing, Michigan will be sold to its Korean battery company LG New Energy. The transaction is expected to be completed early next year.
The investment plan for the Michigan factory was announced in January 2022, with a total investment of $2.6 billion. The factory's planned annual battery production capacity is 50 GWh, which is sufficient to supply 625000 electric vehicles. It has not yet been built. In July of this year, there were reports of construction suspension for this factory, and it is currently expected to be put into operation by the end of this year.
With this sale, General Motors is expected to recoup approximately $1 billion invested in the factory.
In 2019, LG New Energy and General Motors established the battery joint venture Ultium Cells with a 50:50 equity ratio and announced the establishment of three battery factories in the United States.
In addition to the Michigan factory, two other battery factories are located in Ohio and Tennessee, both of which are currently in operation. The above transaction will not affect General Motors' equity in the other two battery joint venture factories.
LG New Energy announced that it is reviewing the acquisition of a battery factory in Michigan with the aim of improving investment and operational efficiency, and maximizing the operating rate of battery factories in North America.
The batteries from the Michigan factory were originally supplied to General Motors. General Motors stated that after the factory is sold, it will supply power batteries to a new customer, but did not disclose their specific identity. Toyota cars from Japan are considered a possible option. Last October, LG New Energy signed a contract with Toyota to supply 20 GWh of power batteries annually, with a validity period of ten years.
General Motors announced the sale of its Michigan power battery factory at a time of uncertainty regarding US electric vehicle subsidy policies.
The transition team of US President elect Trump hopes to cancel the $7500 electric vehicle consumption tax credit, which was proposed by current US President Biden in the inflation reduction bill.
General Motors is currently struggling with the sluggish development of its electric vehicle business. The company stated that its electric vehicle business losses are expected to peak this year and gradually move towards profitability as sales expand.
Three years ago, General Motors proposed to double its revenue by 2030 through a strong electrification transformation and a series of other measures. However, since the acceptance of the electric vehicle market fell short of expectations, General Motors has almost lowered or revoked all targets related to electric vehicles.
General Motors has lowered its electric vehicle production target for this year from 200000 to 300000 units to 200000 to 250000 units. In July of this year, General Motors CEO Bara stated that due to market reasons, the company's electric vehicle production in North America will not be able to reach one million units by the end of 2025.
While General Motors is selling equity in a joint venture battery factory to LG New Energy, the two companies have also announced the expansion of their 14 year battery technology partnership and plan to develop square shell batteries. Square shell battery is one of the mainstream packaging forms of batteries, and LG New Energy's previous products were mainly soft pack batteries.
General Motors stated that the sale of its Michigan factory will not affect its plans to establish a joint venture factory with Samsung SDI. In August of this year, both parties announced an investment of approximately $3.5 billion to build a joint venture electric vehicle battery factory in Indiana, USA. The goal of the joint venture factory is to achieve mass production by 2027, with an initial annual production capacity target of 27 GWh and an expected increase to 36 GWh in the future.