General Motors (GM) will abandon its joint venture battery production plant with South Korean battery maker LG Chem, according to Reuters.
GM has been going strong for the past year and a half and has also established a new battery production site through its joint venture with LG, Ultium Cells LLC. However, according to Reuters, the company will no longer pursue a “fourth production facility”.
The Ultium LLC released information in the fourth quarter of last year indicating that the company’s fourth battery production site would be located in New Carlisle, Indiana, at an initial cost of $2.5 billion.
It’s worth noting that GM made it clear this weekend that “our plans are very clear and include investment in a fourth battery plant in the U.S., but we won’t comment on speculation,” suggesting that the situation regarding the plant’s construction may be much more complicated than initially reported.
Reuters believes that a major obstacle facing GM could be its current relationship with LG. If GM decides to partner with another battery manufacturer, it is unclear whether Ultium would be able to manage the plant. Either SK ON, CATL, or any other manufacturer would probably need to renegotiate.
Let’s assume that GM insists on continuing its partnership with LG and building a fourth battery plant. In that case, the US auto giant would probably have to go through a very difficult negotiation.
As for LG, the South Korean battery maker issued a statement to the Wall Street Journal on Friday saying that negotiations are still ongoing.
As traditional car companies aggressively transition, they are bound to look to expand their battery manufacturing capabilities in the coming years. Obviously, the joint venture partnership model may not guarantee smooth sailing either. It is unclear whether more companies will move in this direction in the future.
