(Bloomberg) -- General Motors Co. is selling its stake in an electric-vehicle battery plant in Lansing, Michigan, to South Korean partner LG Energy Solution, recouping about $1 billion in investment from a facility that will still supply energy cells to the automaker’s EVs.
The move, which GM announced Monday, reflects a realization by the carmaker that its battery cell plants in Ohio and Tennessee, along with some supplies from the new plant in Lansing, will be enough to meet near-term demand for EVs without additional capital investment. GM continues to grow EV sales, but a slowdown in demand and political uncertainty over the future of federal EV tax credits have made the future prospects for all-electric vehicles less certain.
The transaction is expected to close in the first quarter of next year, it said in a statement.
GM still has 50% ownership along with LG in Ultium Cells LLC, which owns the existing two battery plants in Ohio and Tennessee. The plant in Lansing is nearly complete. LG will be able to sell battery cells made in Lansing to GM and other automakers, GM spokesman Jim Cain said in an interview.
“We have the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner,” Paul Jacobson, GM executive vice president and CFO, said in the statement. “When completed, this transaction will also help LG Energy Solution meet demand by leveraging capacity that’s nearly ready to come online and it will make GM even more efficient.”
GM and LG also plan to jointly develop prismatic cells, a move away from relying on the pouch cells currently made by Ultium, GM said in a separate statement. Prismatic are rectangular in shape and can be packaged more efficiently to reduce weight and cost, while simplifying manufacturing.
Under the direction of Kurt Kelty, a former Tesla Inc. executive who GM hired earlier this year to run its battery development, the Detroit-based company has started making changes to the shape and composition of its battery cells and packs.
Kelty said in an interview in October that GM is looking at different battery cell chemistry and shapes to find optimal solutions for every vehicle. Using cells with the same shape and materials made sense when GM started selling its new EVs in late 2022 because it was a way to get a range of models to market quickly.
Now that the company has nearly a dozen models on sale, the company can take a deeper look at how it makes batteries to lower costs. With prismatic cells, GM can fit more of them together in a pack to maximize power storage on board the vehicles at lower cost and weight, he said.
GM has been in discussions with Japan’s TDK Corp. to make batteries in a US plant that use lithium iron phosphate technology licensed from Contemporary Amperex Technology Co. of China. Lithium iron phosphate, or LFP batteries, are cheaper but hold less energy than nickel-rich lithium ion batteries.
When the Chevy Bolt EV goes into production next year, it will use lithium iron phosphate batteries, but they will not come from a US-based venture with TDK yet.
(Updates with GM battery plans from the eighth paragraph.)
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