GM, LG Chem form joint venture to make batteries near Lordstown

DETROIT — General Motors and LG Chem will invest a combined $2.3 billion to mass produce battery cells in northeastern Ohio, near GM's former Lordstown assembly plant, the companies said Thursday.

A 50-50 joint venture between GM and the South Korean battery maker aims to create 1,100 jobs. GM and LG Chem plan to start building the plant in mid-2020 on a greenfield manufacturing site.

With the investment, GM expects to reduce the cost of making electric vehicles. GM has said it plans to introduce 20 EVs globally by 2023.

The plant will have an annual capacity of more than 30 gigawatt-hours, making it among the largest in the world, with potential for expansion, a GM spokeswoman said.

"Ohio and its highly capable work force will play a key role in our journey toward a world with zero emissions," CEO Mary Barra said in a statement. "Combining our manufacturing expertise with LG Chem's leading battery-cell technology will help accelerate our pursuit of an all-electric future."

The battery cells will be used in GM's future EV lineup, including the electric pickup Barra previously announced.

Employees will work for the joint venture, not GM for directly, and decide whether to unionize, the spokeswoman said.

Initially, the joint venture will provide batteries only to GM plants, the spokeswoman said. It could decide to supply other companies in the future.

The partnership also includes a joint development agreement between GM and LG Chem. 

“We think as we do this in a joint fashion, it's going to accelerate our ability to win in the electric vehicle space,” Barra told reporters. “We see this as a very important part of the future … and we believe it will accelerate EV adoption and General Motors’ electric vehicle leadership.”

LG Chem currently provides batteries for the Chevrolet Bolt EV and previously supplied the Chevy Volt and Spark.

In September 2018, GM said it would invest $28 million to make major enhancements to its battery development and testing lab in Warren, Mich. GM planned to add new test chambers and advanced equipment for the automaker’s next-generation battery architecture.

The lab has expanded several times over the last decade to reach 100,000 square feet today. 

GM’s Lordstown complex ended production in March and became permanently closed under the labor contract signed with the UAW this fall. Last month, GM sold the plant to Lordstown Motors Corp., a new company affiliated with Ohio-based EV maker Workhorse Group that plans to build electric pickups for commercial customers.

Union or non-union?

Sources familiar with the plan told Reuters that workers at the GM-LG Chem plant were expected to be represented by the UAW and earn $15 to $17 an hour. If so, it would be the first unionized battery factory in the United States. Tesla's Nevada battery factory and LG Chem's battery plant in Michigan do not have unions.

Pay for a UAW parts worker at GM starts at $17 per hour.

Barra said Ohio is providing financial incentives for the plant, but declined to provide details.

White House trade and manufacturing adviser Peter Navarro told Reuters he thinks the plant will expand over time and be a significant anchor of employment in Lordstown.

"The battery plant itself is a critical part of GM’s overall strategy to dominate the EV market over the next several decades," Navarro said.

Reuters contributed to this report.