General Motors announced a joint venture Thursday with South Korea's LG Chem to manufacture electric-vehicle batteries in northeast Ohio, a significant step for the nation's largest automaker in its bid to electrify its future offerings.
The companies said their $2.3 billion investment will create 1,100 jobs near Lordstown, Ohio. It's the same area where General Motors in November sold a closed manufacturing facility to Lordstown Motors, a company seeking to build battery-electric pickups.
The joint venture, coupled with the sale to Lordstown Motors, "positions Northeast Ohio and the Mahoning Valley as a major hub for technology and electric vehicle manufacturing," GM said in a news release. The company said that it will be among the largest battery factories in the world.
General Motors chief executive Mary Barra announced the plan during a conference call, and the companies said the venture would be an equal split.
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"What you're hearing from General Motors is a commitment to electric vehicles," said Barra, who later noted, "there's still going to be a demand for internal combustion vehicles."
Hak-Cheol Shin, LG Chem CEO, said the joint venture will reduce electric-vehicle costs to the point where they can replace those powered by internal combustion engines.
"We believe by working together we'll accelerate and get to industry leading cost levels," Barra said.
GM said the facility is expected to break ground in mid-2020.
The state is working with the joint venture on an incentive package for the new factory, but Lt. Gov. Jon Husted said the terms won't be disclosed until the details are finished.
He said the Lordstown area has plenty of land for the new factory but would not disclose if a site had been picked. "The people in that part of the state will be very eager to make accommodations to make sure this facility is successful," Husted said.
The Lordstown factory stopped making cars in March. Just two years ago it employed 4,500 workers on two shifts who made the Chevrolet Cruze compact car. Most of those employees either retired or transferred to other GM factories.
GM is in a fierce battle to catch up with U.S. rivals in the electric-vehicle space, after Silicon Valley's Tesla cornered the early-adopter market and Ford recently announced a Mustang Mach-E electric variant to great fanfare in Los Angeles.
Though consumers have been slow to adopt the technology so far, the electric-vehicle market is expected to grow substantially in coming years -- as automakers introduce mass-market electric vehicles with longer ranges at lower costs. According to analysis from CFRA Research, automakers are expected to introduce 25 new electric models in the United States alone next year. The shift is also creating a demand for lithium-ion batteries. Tesla aims to meet global demand with its Gigafactory 3, under construction in Shanghai.
GM introduced many customers to electrification with its Chevrolet Volt roughly a decade ago, the since-discontinued sedan that went a short range on battery-only power before a gas engine kicked in to generate power for long-distance trips. Chevy went fully electric with its Bolt, a longer-range car that ran only on battery power, but sales have paled in comparison with Tesla's similarly priced Model 3.
GM has significant catching up to do in the space. The CFRA Research analysis predicted that electric vehicles will make up merely 2% of GM's sales by 2030, less than its competitors Ford and Chrysler, and substantially less than European automakers such as BMW, Mercedes and Volkswagen.
Barra said the combined expertise of the companies could accelerate electric-vehicle adoption and leadership, as GM seeks to add 20 electric models to its fleet by 2023.
Cells from the factory will go into the next generation of GM electric vehicles, including a new battery-electric pickup scheduled to go on sale in 2021.
Barra added that it would be up to workers whether the facility was represented by a union such as United Auto Workers.
"This is something the people of Ohio and the state has earned because of their capabilities," Barra said. "Clearly we want to tap into the great workforce that's in Ohio."
The joint venture likely will pay less than the roughly $30 per hour that GM pays unionized assembly plant workers. Barra said the plant will follow GM's component manufacturing strategy, where workers are paid less than at assembly plants. She said it will have to be cost-competitive.
Battery cells from the plant likely will be shipped to factories where the electric vehicles are made, where they will be assembled into battery packs, GM said.
The automaker has promised that it would have 20 battery-powered vehicles on sale globally by 2023.
Fully electric vehicles currently make up about 1.5% of U.S. new-vehicle sales, and LMC Automotive forecasts that it will rise to 7.5% by 2030. The forecasting firm doesn't see sales hitting 50% of the market until at least 2049.
Globally it's a different story. Navigant Research foresees growth from just over 1 million sales last year to 6.5 million by 2025. The surge is expected because of government incentives and fuel economy regulations in China.
Information for this article was contributed by Faiz Siddiqui of The Washington Post; and by Tom Krisher of The Associated Press.
Business on 12/06/2019