GM reportedly leaving the JV battery plant with LG

General Motors (GM) is reportedly exiting a battery manufacturing joint venture with Korean battery maker LG Chem.

GM has been on a tear for the past year and a half, setting up new battery manufacturing sites through its subsidiary joint venture formed with LG called Ultium. However, the fourth production facility will reportedly no longer be pursued, according to leaked information provided to Reuters.

According to information released by Ultium LLC in the fourth quarter of last year, the company’s fourth battery production site would be in New Carlisle, Indiana, and the initial cost would be $2.5 billion. However, in a comment to the press at the end of the week, GM specified that “We have been very clear that our plan includes an investment in a fourth US cell plant, but we are not going to comment on speculation,” indicating the situation with regarding the construction of the plant may be more complex than initially reported.

A major hurdle for GM could be current ties to LG through its battery-producing subsidiary Ultium. In the event that GM decides to partner with another battery maker, it remains unclear whether Ultium would be able to manage that plant or if it would need its own management that could in turn work with the new supplier; be it SK ON, CATL or another manufacturer. However, suppose GM continues to partner with LG and establish the fourth location. In that case, the US auto giant may have to go through a potentially tedious negotiation process.

As for LG, the South Korean battery maker has yet to withdraw from the negotiating table and released a statement on Friday to the Wall Street Journalsaying that talks were still ongoing.

As older automakers continue to look for ways to expand their battery manufacturing capabilities in the coming years, it’s clear that the collaborative model won’t always be beneficial. And while many have appreciated sharing the cost of creating these numerous production sites with battery makers, it’s clear that Tesla’s more direct vertical approach has its advantages as well. It remains unclear whether more companies will move in that direction in the future.

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GM reportedly leaving the JV battery plant with LG

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