December 3, 2021: -General Motors plans to form a new joint venture with a South Korean chemical company to produce the necessary materials needs for EV batteries, a significant move to control its supply chain and lessen the chances of disruptions in the future.
On Wednesday, the Detroit automaker said it signed a nonbinding term sheet with Posco Chemical to create the joint venture and expects to execute definitive agreements soon.
Shares of GM were up 3.3% on Wednesday afternoon to almost $59.78 a share.
The companies plan to open a new facility in North America in 2024. GM said the plant would process critical battery materials known as active cathode material, or CAM, for GM’s electric vehicles.
CAM represents about 40% of the cost of a battery cell, the automaker said. GM’s new batteries use cathodes made of nickel, cobalt, and other materials.
GM automakers are scrambling to integrate onshore supply chains for electric vehicle batteries to decrease costs and lower risks of supply chain disruptions.
The Biden administration urged companies to bring work to the U.S. following an ongoing global shortage of semiconductor chips especially supplied from Asia, causing massive shutdowns of factories.
The automaker declined to release specific details like cost or the location of the planned facility, supplying the materials to announced battery plants for GM in North America, ahead of the definitive agreements being signed.
“This is going to be a pretty huge investment for GM and Posco,” Doug L. Parks, executive vice president of global product development, purchasing, and supply chain at GM, told the media in a call Wednesday.
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