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GM, LG end plans for fourth U.S. battery cell plant; automaker seeks latest partner

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GM CEO and Chairman Mary Barra and LG Chem Vice Chairman and CEO Hak-Cheol Shin on the automaker’s battery lab in Warren, Mich., where the businesses announced a latest $2.6-billion three way partnership on Dec. 5, 2019.

GM

DETROIT – General Motors and LG Energy Solution have indefinitely shelved plans to construct a fourth battery cell plant within the U.S., as talks between the 2 sides recently ended without an agreement, an individual aware of the plans confirmed to CNBC.

The Detroit automaker is anticipated to proceed with its plans to construct the plant but is searching for an additional partner, in response to the one who asked to not be named since the talks are private.

“We have been very clear that our plan includes investing in a fourth U.S. cell plant, but we’re not going to comment on speculation,” GM said Friday in an emailed statement.

The Wall Street Journal first reported Friday afternoon that talks had stalled between GM and LG partially because LG Energy executives in Korea were hesitant to commit to the project given the rapid pace of its recent investments with other automakers in addition to the uncertain macroeconomic outlook. 

The paper, citing unnamed sources aware of the plans, said GM is in discussions with a minimum of one other battery supplier to proceed with the fourth U.S. battery-cell factory.

The breakdown in talks comes after GM CEO Mary Barra and other executives have said they have been near announcing details of the fourth plant, which was expected to be inbuilt Indiana, for a while.

Read more about electric vehicles from CNBC Pro

GM and LG initially announced the joint-venture for a $2.3 billion plant in Ohio in December 2019, followed by other plants near GM operations in Michigan and Tennessee. Only the Ohio plant is currently operating, while the others are under construction. The three way partnership known as Ultium Cells LLC.

A spokeswoman for Ultium referred inquiries to GM and LG Energy. In an emailed statement, LG Energy said discussions on a fourth Ultium Cells plant “remain ongoing between LG Energy Solution and GM, but no decision has been made.”

The connection between GM and LG Energy is crucial to the automaker’s future plans for EVs, including topping Tesla and others to change into the U.S. leader in all-electric vehicle sales. The Detroit automaker is anticipated to release a handful of latest EVs this yr, including mass-market vehicles akin to the Equinox, Blazer and Silverado.

GM, in its Friday statement, said its second and third plants with LG are on the right track to open as scheduled in 2023 and 2024, respectively. The corporate also confirmed it’s on the right track to hit 1 million EV production capability annually in North America in 2025.

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