GM, LG end plans for fourth U.S. battery cell plant as automaker seeks new partner

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GM CEO and Chairman Mary Barra and LG Chem Vice Chairman and CEO Hak-Cheol Shin at the automaker’s battery lab in Warren, Mich., where the companies announced a new $2.6-billion joint venture on Dec. 5, 2019.
GM

DETROIT – General Motors and LG Energy Solution have indefinitely shelved plans to build a fourth battery cell plant in the U.S., as talks between the two sides recently ended without an agreement, a person familiar with the plans confirmed to CNBC.

The Detroit automaker is expected to continue with its plans to build the plant but is searching for another partner, according to the person who asked not to be named because the talks are private.

“We’ve been very clear that our plan includes investing in a fourth U.S. cell plant, but we’re not going to comment on speculation,” GM said Friday in an emailed statement.

The Wall Street Journal first reported Friday afternoon that talks had stalled between GM and LG in part because LG Energy executives in Korea were hesitant to commit to the project given the rapid pace of its recent investments with other automakers as well as the uncertain macroeconomic outlook. 

The paper, citing unnamed sources familiar with the plans, said GM is in discussions with at least one other battery supplier to proceed with the fourth U.S. battery-cell factory.

The breakdown in talks comes after GM CEO Mary Barra and other executives have said they’ve been close to announcing details of the fourth plant, which was expected to be built in Indiana, for some time.

GM and LG initially announced the joint-venture for a $2.3 billion plant in Ohio in December 2019, followed by other plants near GM operations in Michigan and Tennessee. Only the Ohio plant is currently operating, while the others are under construction. The joint venture is called Ultium Cells LLC.

A spokeswoman for Ultium referred questions to GM and LG Energy. In an emailed statement, LG Energy said discussions on a fourth Ultium Cells plant “remain ongoing between LG Energy Solution and GM, but no decision has been made.”

The relationship between GM and LG Energy is crucial to the automaker’s future plans for EVs, including topping Tesla and others to become the U.S. leader in all-electric vehicle sales. The Detroit automaker is expected to release a handful of new EVs this year, including mass-market vehicles such as the Equinox, Blazer and Silverado.

GM, in its Friday statement, said its second and third plants with LG are on track to open as scheduled in 2023 and 2024, respectively. The company also confirmed it is on track to hit 1 million EV production capacity annually in North America in 2025.

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