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GM and LG Energy Solution Give Up on Fourth Joint Battery Plant in the U.S.

When General Motors blamed LG Energy Solution (LGES) for the massive Chevrolet Bolt EV recall it had to perform, it seemed that their partnership to make the Ultium cells and platform could go sour. The battery maker’s acceptance of paying $1.9 billion of the $2 billion in costs seemed to settle things, but that was not the case. Other clashes eventually led them to not follow through with the plans for Ultium, and the last factory will not happen – at least not as it was planned.
Ultium battery pack 9 photos
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GM and LGES had agreed on having four factories to make Ultium cells. According to Bloomberg, the American automaker wanted to have enough supply to build 400,000 EVs by mid-2024 and 1 million by 2030. LGES thought GM was rushing things and did not want to commit to its plans, which made the automaker look for another battery partner for its fourth plant. In other words, GM’s fourth battery factory will happen – just not with LGES.

That makes us wonder how the Ultium strategy will proceed. Cars made with batteries from this fourth factory probably will not have Ultium cells or the Ultium architecture because those are products of a joint venture. If LGES is not involved, the name Ultium will probably be out of the equation.

If a new battery partner can use the same name, the whole joint venture idea will not make sense. It will be clear that Ultium is a GM brand and that the automaker can decide when to use it regardless of what LGES thinks about it. It will be interesting to see how this story develops.

Bloomberg states that GM’s decision to build a fourth factory without the South Korean supplier was not due solely to the recall or different views on how fast they should move. LGES and the American automaker have been disagreeing on at least something else: unionizing strategies.

GM already has one Ultium plant working in Lordstown, Ohio, and is building two others with LGES: one in Michigan and the other in Tennessee. When the United Auto Workers (UAW) decided to organize the Lordstown plant, the automaker was willing to accept a “card check” process, which would only depend on more than half of the workers wanting to unionize.

LGES has one more person on Ultium’s board and refused to follow this faster process. That forced an election process that UAW won anyway. In other words, Ultium only wasted time with something the South Korean supplier may have believed it could avoid.

GM did not confirm if it is really talking to other battery suppliers to build its fourth cell factory on American soil, but it told Bloomberg its strategy needs all four initially planned. Strategically speaking, having all your eggs in a single basket is never wise – even if that was precisely what GM was doing until very recently.

 
 
 
 
 

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