General Motors Co. and Samsung SDI announced plans on Tuesday to build a $3 billion joint-venture electrical vehicle (EV) battery plant in the United States.
The news comes as South Korean president Yoon Suk Yeol is in Washington to meet President Joe Biden on what is the first state visit to the United States by a South Korean leader in 12 years.
Yoon, who has made business opportunities a cornerstone of his foreign policy visits, is accompanied on the U.S. visit by more than 100 executives from South Korea’s biggest companies, including Samsung Electronics executive chairman Jay Y. Lee and Hyundai Motor Group executive chair Euisun Chung.
The new factory is expected to have an annual production capacity of 30-gigawatt hours (GWh), according to a joint statement of the two companies. It is expected to start production in 2026; its location has not yet been decided. The plant will produce high-nickel prismatic and cylindrical battery cells.
Detroit-based General Motors (GM), competing with Tesla Inc., is looking to diversify its supply chain to meet its electrification goals, similar to other automakers.
“With multiple strong cell partners, we can scale our EV business faster than we could going it alone,” GM executive Doug Parks said.
Samsung was picked as the partner for this fourth GM plant after some Chevrolet Bolt batteries made by LG caught fire, forcing GM to recall about 142,000 vehicles due to a battery-manufacturing problem. The recall cost GM about $1.9 billion, and the automaker said it was reimbursed for the cost by LG.
GM already has a joint venture in the United States with LG Energy Solution, and has been investing to ramp up cell production with the South Korean battery maker to take advantage of subsidies under the Inflation Reduction Act.
The U.S. Energy Department finalized a $2.5 billion loan to the GM-LG Energy joint venture late last year. The companies are building a $2.6 billion plant in Michigan, set to open in 2024, one of three jint-venture Ultium Cells LLC plants.
They dropped plans for a fourth plant in New Carlisle, Indiana, but GM could still pick the site for a battery plant with another partner, Reuters reported in January.
GM said last year it expects to build 400,000 EVs in North America from 2022 through mid-2024, and increase capacity to one million units annually in North America in 2025. Sources say GM is considering if it will eventually need at least two additional EV plants to meet future EV demand.
The EV Battery Race Continues
Hyundai Motor Group and SK On, a battery unit of SK Innovation Co. Ltd., plan to set up a battery joint venture in the U.S. state of Georgia, in an investment worth a combined about $4.86 billion, the two companies said on Tuesday.Last year, car maker Stellantis NV and Samsung SDI said they would invest more than $2.5 billion to build a new joint-venture battery plant in Kokomo, Indiana.
Stellantis and LG Energy said in 2022 they would invest $4.1 billion for a joint-venture battery plant in Canada.
Most South Korean battery-related shares were down on Tuesday, with Samsung SDI shedding 3 percent as of 04:07 GMT, versus a 1.8 percent drop in the broader market.
The Samsung company has been hit by big losses this month.
It reported a likely 96 percent plunge in first-quarter operating profit on April 7, as a chip glut worsened and buyers slowed purchases amid a global economic slowdown.
It was also hit with a $303 million patent lawsuit, after Netlist Inc., a U.S.-based company, convinced a federal jury in Texas to award it more than $303 million for Samsung Electronics Co.’s infringement of several patents related to improvements in data processing.
Samsung had argued that the patents were invalid and that its technology worked in a different way than Netlist’s inventions.
Meanwhile, German auto giant Volkswagen has secured an exclusive contract with Canada that could be worth more than $13 billion over the next 10 years to build an EV battery plant in southwestern Ontario.
Volkswagen announced last month it had chosen the city of St. Thomas, Ontario, to build its first overseas gigafactory. The plant, which will be operated by Volkswagen’s battery company PowerCo, marks the first manufacturing presence in Canada for the world’s largest automaker.
