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GM to partner with LG Chem on a new Ohio factory for electric vehicle batteries

Jamie L. LaReau
Detroit Free Press
Battery cell modules travel down the line to be assembled into eAssist and hybrid electric vehicle packs at the GM Brownstown Battery Assembly Plant in Brownstown Township. The facility assembles six different batteries supporting nine GM vehicles.

General Motors said Thursday it is partnering with South Korea's LG Chem in a joint venture to build batteries for electric vehicles in a factory to be located near Lordstown, Ohio.

The companies said they will invest up to $2.3 billion through a new, equally owned joint venture. The JV will establish a battery cell assembly plant in northeast Ohio. Groundbreaking is expected in mid-2020. It will create 1,100 jobs. 

“With this investment, Ohio and its highly capable workforce will play a key role in our journey toward a world with zero emissions,” said GM CEO Mary Barra. “Combining our manufacturing expertise with LG Chem’s leading battery-cell technology will help accelerate our pursuit of an all-electric future."

Repairing relations

GM closed its Lordstown Assembly Plant earlier this year, opening a wound with the UAW and President Donald Trump. Worker anger over the closing of Lordstown and two transmission plants helped fuel the bitter 40-day strike against GM during talks for a new UAW contract this fall. 

Many of the 1,600 GM workers at Lordstown were relocated to jobs at GM plants in other states. But about 400 former Lordstown employees instead took a buyout. Asked if this new investment will mend hard feelings with those workers, Barra told reporters Thursday, “This is very significant with 1,100 jobs. We think this is very important for the state of Ohio and they have a very capable work force and this will help us succeed.”

Barra said it will be up to the new workforce if they want to unionize. She declined to say whether former Lordstown workers would get preference for hiring at the new plant.

“Clearly, we want to tap into the great workforce that is in Ohio,” Barra said. 

In its 2019 UAW talks, GM had said it would bring battery cell production to the Mahoning Valley. 

“To have successful electric vehicles we’d have to be competitive" in pay, she said. 

UAW Local 1112 President Tim O’Hara said he wishes GM would have invested that $1 billion in the Lordstown plant instead of selling it. But a new battery plant will be good for the area, even if it might be “a couple years away from it being up and running.”

As far as Barra saying it’s up to the new employees if they want to unionize or not, O’Hara said, “Hopefully, they’ll be accommodating to an organizing drive because a lot of businesses fight unions tooth and nail when they try to get in there so we’ll see how that all works out.” 

Barra said GM is on track to achieve its goal of developing 20 electric models to sell worldwide by 2023 and that it will debut a second, all-new Chevrolet EV next year.

Government perks

LG Chem said earlier Thursday it would invest $916 million in its U.S. subsidiary by 2023 to set up the joint venture with GM, according to a Reuters report.

The deal between GM and LG Chem had some government encouragement. The White House knew about it, said Barra, who declined to comment further, deferring to the Trump administration for comment.

The White House did not immediately respond to a request for comment.

The Ohio governor's office said it pushed for GM to create more automotive jobs after idling Lordstown. Barra confirmed the state gave GM incentives, but she declined to disclose details.

JobsOhio has not yet executed incentives for GM and LG Chem, which have not named a specific site to date, said Matt Englehart, spokesman for the state’s economic development arm.

“We’ve had a longstanding relationship with GM and are happy to welcome LG Chem to Ohio,” he said.

The deal sets up Ohio to participate in the “ongoing electrification of vehicles.”

These agreements typically involve tax incentives, which would need approval from the Ohio Tax Credit Authority, a five-member panel appointed by the governor and legislative leaders. 

U.S. Sen. Rob Portman, R-Ohio, said he would have preferred GM keeping the Lordstown plant in operation.

“I applaud GM’s announcement that it will build a new battery plant in the Mahoning Valley to provide employment to some of the talented workers in the region," said Portman. "While I remain disappointed that GM chose not to reinvest in its Lordstown auto assembly plant, I’m hopeful this new investment will be the beginning of a sustained, long-term commitment to the region that will continue to grow over time."

Making EVs affordable

The new battery plant will use the latest manufacturing processes to produce battery cells efficiently, gaining economies of scale throughout the value chain, GM said. The plant will be able to adapt to ongoing advances in technology and materials. The goal is to reduce battery costs to industry-leading levels. 

The joint venture with LG Chem is “critical” to making electric cars more affordable for consumers and profitable for automakers, said Barra. She said it will “accelerate our ability to win in the EV space. General Motors has committed that our next generation of the EV architecture will be desirable, profitable and affordable. It has to be affordable. That is the journey we’re on and working with LG will accelerate that path.” 

For its part, LG Chem will gain access to an experienced workforce, it said. It will also benefit from a dedicated production stream of future EVs from GM’s next generation of fully electric vehicles, including a new electric truck coming in the fall of 2021 that will be built at GM's Detroit-Hamtramck Assembly Plant.

“Our joint venture with the No. 1 American automaker will further prepare us for the anticipated growth of the North American EV market, while giving us insights into the broader EV ecosystem,” said LG Chem CEO Hak-Cheol Shin.  

Shin told reporters that LG Chem’s battery business is expected to grow to $25 billion by 2024. He said the company has experience in technology development, holding over 17,000 patents in battery technology and a record for safety and reliability. It also has experience in mass producing batteries which is “a distinct competitive advantage that no one can easily replicate.”

GM has been making lithium-ion battery packs at its Brownstown Battery Assembly Plant in Brownstown, about 20 miles south of Detroit. There it assembles battery packs for its Chevrolet Malibu Hybrid. Brownstown also makes the roof module for all of the GM Cruise self-driving cars. 

This investment builds on GM’s $28 million investment in its Warren battery lab announced late last year. It is also in addition to manufacturing investments in Ohio announced earlier this year totaling approximately $700 million that will create about 450 jobs in Toledo, Parma and Brookville, Ohio. 

A deal with Workhorse?

GM sold its 6.2 million-square-foot Lordstown plant last month to investment group Lordstown Motors, which is backed by electric truck maker Workhorse Group in Cincinnati.

Lordstown Motors will build the Endurance electric pickup starting next year. It will initially create 450 jobs. The truck uses components licensed from Workhorse. The Endurance, designed for fleet sales, is a lightweight, all-wheel drive vehicle with a low center of gravity.

The price of the factory sale was not disclosed. But the Tribune Chronicle of Warren, Ohio, reported that Sen. Portman said the price was $20 million. Lordstown Motors CEO Steve Burns said he didn’t know where Portman got the number, but he didn’t dispute it.

In terms of any possibility of GM investing in Lordstown Motors, Barra said on Thursday that Lordstown Motors bought the facility outright.

“That doesn’t mean you couldn’t see something in the future, but right now they have their own plant” and are preparing to produce electric trucks alone, and “we are looking forward to that.”

Burns told the Free Press last month that hiring for the bulk of the first 450 production jobs will take place in September 2020 before production starts in November. Wages will be competitive and they will be union jobs, Burns said. That 450 is a far cry from the 5,000 people who once worked at the factory when GM owned it and built the Chevrolet Cruze there, but Burns said "our goal is to exceed that." 

On Nov. 15, 2019, just days after General Motors sold its Lordstown Assembly Plant,  the sign for the Chevy Cruze was removed, leaving this bare wall facing the road.

"We’re making this our headquarters, so we want sales and marketing and as much engineering as we can to come out of that facility," Burns said.

He described a vision of an electric vehicle hub for the Midwest and a plant where electric motors, battery cells, battery packs and ancillary products are built.

The Endurance is among many electric pickups in the works: 

  • Tesla debuted its electric pickup dubbed "Cybertruck" on Nov. 21.
  • Rivian, which is partnered with Ford and Amazon, is building an electric truck due in late 2020.
  • GM has said it will invest $3 billion in Detroit-Hamtramck to build an electric pickup and other electric vehicles, possibly reviving the Hummer brand there. It will created some 2,225 jobs.
Tesla co-founder and CEO Elon Musk gestures while wrapping up his presentation of the newly unveiled all-electric battery-powered Tesla Cybertruck at Tesla Design Center on Nov. 21, 2019 in Hawthorne, Calif. (Photo by Frederic J. BROWN / AFP) (Photo by FREDERIC J. BROWN/AFP via Getty Images)

To prepare for it, GM said on Tuesday that it is laying off 814 hourly and salary workers at Detroit-Hamtramck starting Feb. 28. The 753 hourly workers impacted will be offered buyouts or jobs at other GM facilities in Michigan and Ohio, GM said.

More:GM sells its Lordstown Assembly plant to electric truck start-up

More:Lordstown Motors CEO says workforce will be union

GM has been making electric cars since 2011 when it launched the Chevrolet Volt electric-hybrid. GM ended production of the Volt this year. Since 2016, GM has built the all-electric Chevrolet Bolt sedan and in 2017 it started building the GM Cruise autonomous test vehicles in its plant in Lake Orion.

Contact Jamie L. LaReau at 313-222-2149 or jlareau@freepress.com. Follow her on Twitter @jlareauan. Read more on General Motors and sign up for our autos newsletter. Jessie Balmert contributed to this report.