GM and South Korea’s LG Chem plan to build a $2.3 billion battery factory in Ohio, the latest example of an auto maker plowing money into the development of electric cars. The new plant would be among the world’s biggest producing battery cells for electric cars, rivaling Tesla’s Gigafactory in the Nevada desert, reports The Wall Street Journal (Dec. 7, 2019). Auto makers have been joining forces with battery makers as they gear up to spend about $225 billion to develop new electric-vehicle models over the next several years. (GM plans to introduce at least 20 electric models globally by 2023).
GM said the new battery plant, which would employ more than 1,100 workers, would have a capacity to manufacture enough batteries annually to produce more than 30 gigawatt hours. (Tesla’s plant has output of about 24 gigawatt hours). GM and LG Chem will co-develop and assemble battery cells to be used in the auto maker’s electric vehicles, including a battery-powered truck GM plans to introduce in 2021. GM said the joint venture with LG will speed GM’s electric-vehicle development and reduce costs. Toyota, for example, is finding it hard to build enough batteries to keep up with rising demand for hybrids, which use a combination of gasoline and battery power. “We can assemble the cars,” said one Toyota exec. “The assembly is not the bottleneck. It’s the battery itself.”
Auto union officials have expressed concern that the expansion of electric vehicles poses a long-term threat to auto-factory employment, because they require less manpower to produce than gasoline-powered cars. Battery-cell plants are highly automated and require different skills than those needed at traditional car factories. The plants’ employees include test technicians, computer programmers and equipment engineers.
Classroom discussion questions:
- Why is there a battery bottleneck?
- Prepare a SWOT analysis of GM’s strategy.
It is not clear to me whether the issue in batteries is a lack of raw material OR a lack of factories to make the batteries.
Are there large stockpiles of lithium, cobalt and nickel, but a lack of factories ??
Good question, Andrew! It seems the supply of lithium-ion batteries could be short in coming years as more EVs hit the market, so auto makers want to lock in supply contracts. .
The Journal adds: “GM and LG are hedging their bets on the U.S. electric-vehicle market, which is expected to develop more slowly than in Europe and China”.