GM is considering a partnership for battery components for electric vehicles. It’s a supply chain disruption.
has taken another step towards the vertical integration of its supply chain for electric vehicles, revealing a plan to collaborate with
to build a North American manufacturing plant for battery cathode materials.
That’s a big step for GM, the auto industry, and even for the news-winning US shares of GM (ticker: GM), rising about 3.7% to a hair’s breadth below $ 60 on Wednesday at noon. The shares closed 0.4% higher at $ 58.06.
Dow Jones Industrial Average
gave up its initial gains and closed down 1.2% and 1.3%, respectively. The Omicron variant of Covid-19 continues to generate business volatility.
GM has big plans for electric vehicles: it wants to sell only electric vehicles by 2035. In the meantime, it has announced plans to spend $ 35 billion on vehicle development and the manufacturing capacity to get there. Along with traditional assembly plants, GM plans to build battery plants with a partner
This is where the new factory fits. Today, most cathode materials (cathodes and anodes are the opposite sides of a battery that facilitate the flow of electricity) are made in Asia. Bringing production to the United States cuts costs and gives GM more control over sourcing and technology development.
“Our work with POSCO Chemical is a key part of our strategy to rapidly increase production of electric vehicles in the United States and drive innovation in battery performance, quality and cost,” said Doug Parks , GM Executive Vice President, Global Product Development, Purchasing and Supply Chain, in GM Press Release. “We are building a sustainable and resilient North American-centric supply chain for electric vehicles spanning the entire ecosystem, from raw materials to manufacturing and recycling battery cells. “
Cathodes EV investors hear about these days include things like iron, cobalt, nickel, and lithium. These are the materials that will be introduced into the new facility. Sourcing these items is one more step in the EV supply chain.
Cathode materials from the plant will be transported to GM’s new battery plants, which will supply automotive assembly operations. The work of the supply chain, along with GM’s research and development, is aimed at reducing costs. That could help GM produce a Chevy EV crossover, mid-size between a sedan and an SUV, starting at around $ 30,000 by the middle of the decade, as management has announced.
Cathodes are “about a third to half of the cost of the battery and they are a very important function in terms of driving capability,” CFO Paul Jacobson said at an investment conference Wednesday. “This is the first of many announcements that we are talking about in the months and years to come as [GM’s] take a long-term view throughout this journey towards the transformation of electric vehicles.
The plant will be operational around 2024. GM has not disclosed a price, but the money for the plant is part of the $ 35 billion planned spending. GM says the plant will create hundreds of jobs, jobs that would have ended up overseas without local investment. The company has not yet disclosed the location of the plant.
Write to Al Root at [email protected]