GM sells out of Michigan battery plant

US legacy automaker GM is selling its share in an under-construction gigafactory in Lansing, MI to its joint venture (JV) partner, South Korean battery firm LG Energy Solution (LGES). The move is another step away from the firm’s previous ‘one size fits all’ strategy towards more diversified mix of in-house battery making and outsourcing to multiple suppliers.

The firm expects to recoup its investment in the Michigan plant when the deal closes in the first quarter of next year. It is also retaining its stake in the Ultium Cells JV with LGES, which will continue to operate pouch battery cell facilities in Ohio and Tennessee.

"We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner,” says GM CFO Paul Jacobsen. “When completed, this transaction will also help LGES meet demand by leveraging capacity that is nearly ready to come online, and it will make GM even more efficient." 

Separately, GM’s partnership with LGES will be extended to include prismatic cell development. Prismatic cells, GM says, feature a flat, rectangular shape with a rigid enclosure, which allows for space-efficient packaging within battery modules and packs — an approach that can reduce EV weight and cost, while simplifying manufacturing by reducing the number of modules and mechanical components.

“We are focused on optimising our battery technology by developing the right battery chemistries and form factors to improve EV performance, enhance safety, and reduce costs,” says Kurt Kelty, GM vice-president of battery cell and pack. “By extending our partnership with LGES, we’re taking an important step toward these goals.” 

Strategic pivot

Divesting ownership of the plant in MI and expanding the LGES partnership into prismatic cells both align with the new battery strategy that Kelty outlined at GM’s investor day in early October. “We went deep with LGES on cell manufacturing and we designed one common module,” Kelty explained at that time.

“This strategy gave us flexibility in a common module used in everything from the Equinox EV to the Escalade IQ. Without this common building block, we could not have launched the wide range of all new EV models that we have today. Having established a strong presence in the EV market across categories and prices, we can now take the next step on our journey.”

It now “makes business sense to transition from one size fits all to new programme-specific batteries”, Kelty explains. “With even more cell form factors and chemistries to choose from, we can create even greater value for our customers.”

Future GM batteries promise to include high nickel and mid nickel for premium performance vehicles and the firm’s longest-range EVs. But it will also expand the use of lithium ferro phosphate, or LFP, in its portfolio of lower-cost BEV options.

“With LFP, we have an opportunity nobody else has,” says Kelty. “We have enough space in our truck platform that, with clever engineering, we can use low-cost LFP to get range of over 350 miles. Our team is actively working to localize supply of LFP with more to come.”

And it is also looking at different form factors, as these “impact your safety, your pack integration, your energy density, supplier optionality, and durability”. “We also intend to expand our technology portfolio with prismatic cells as a means to lower pack costs while increasing energy density.

"The use of prismatic cells will help us simplify battery pack manufacturing, improve supply redundancy, and competitive pricing,” the GM cells chief promises. In late August, his firm signed a deal with another South Korean battery firm, Samsung SDI, to manufacture high-performance nickel-rich prismatic batteries in a JV in Indiana.

In addition, cylindrical cells will make up a small portion of GM portfolio, mainly for high performance models and potentially for PHEVs.

Not finished yet

And we should expect more announcements to come. “We are working on other partnerships that we hope to announce soon,” Kelty said in October. “We are going to continue to enhance our partner strategy, bringing in the right companies with the right cells for the right vehicles to help us achieve our performance and cost goals.”

He sums up GM’s new battery strategy thus:

— with the ability to leverage LFP and mid-nickel chemistries alongside high nickel, we improve our flexibility to meet customer demands and improve EV profitability;

— by expanding the use of prismatic cells, we can simplify battery pack manufacturing and increased supply opportunities;

— by introducing more partners like Samsung SDI and others alongside LGES, we can improve our ability to adapt to changes in the market;

— by expanding our battery strategy with a common set of technologies that can be used within our existing battery pack and vehicle electrical architecture, we can continue to improve safety and achieve the flexibility and agility to meet our battery goals;

— providing optionality without increasing complexity;

— matching price and performance to meet customer expectations while maximising EV profitability.