November 28, 2024

• 

Logos of LG and GM (Downloaded from each company's website)

LG Energy Solution on Wednesday denied earlier reports on the alleged decision to put a pause on the joint plan with General Motors to build a fourth battery cell manufacturing plant for electric vehicles in the US.

“The two companies are still in discussions about Ultium Cells’ fourth plant in the US and no specific decisions have been made at this point,” an official at LG Energy Solution told The Korea Herald.

Ultium Cells, a joint venture established by LG Energy Solution and GM in 2019 for battery cell production in the US, indicated it was considering building an estimated $2.4 billion EV battery plant in Indiana, according to the South Bend Regional Chamber of Commerce in August.

The Wall Street Journal on Friday reported that the two companies' factory-building plan has been “shelved indefinitely,” citing anonymous sources familiar with the matter. The report explained that the deal was scrapped partly because the South Korean battery maker’s executives were hesitant to commit to the project with the company’s recent series of investment decisions in the US.

Ultium Cells, which began the operation of its first plant in Ohio last year, is constructing the second and third manufacturing facilities in Tennessee and Michigan. The total investment for the three plants is estimated at over $6.5 billion. The three sites are expected to have a production capacity of at least 120 gigawatt-hours per year upon completion.

According to Reuters on the same day, GM released a statement that said the company has been “very clear” about its plan to invest in a fourth US battery cell plant without elaborating any further on the speculation.

Battery and automotive industry sources here said the report on the scrapped plan indicates that the Korean battery makers have now gained the upper hand in talks with global automakers.

“LG Energy Solution and GM have constantly carried out discussions. But LG Energy Solution is now in a more advantageous position, compared to negotiations for the first, second and thirds plants. So discussions will take more time,” said a source with knowledge of the situation.

LG Energy Solution announced its plans to establish a joint venture with Honda and Stellantis last year, expanding its share in the global battery market.

The WSJ reported that GM was in discussions with at least one other battery supplier to continue with an additional US battery cell factory, adding that details about the talks could not be obtained.

Automotive and battery industry sources in Korea pointed to Samsung SDI, the country’s other battery maker, as the alternative partner for GM to go ahead with its fourth battery cell manufacturing plant in the US.

“In the case of CATL, it won’t work well for GM due to the thorny relationships between the US and China,” one of the sources told The Korea Herald. “After the LG Energy Solution fallout, the remaining options for GM are SK On and Samsung SDI. SK On has already committed to a lot of investment.”

Samsung SDI said the company is continuously reviewing options for future partnerships but there were no imminent decisions or announcements to be made regarding an agreement with GM.

“We are currently focused on (building the EV battery plant with) Stellantis,” said an official at Samsung SDI, referring to the two companies' announcement in May to form a $2.5 billion joint venture for lithium-ion battery production in Indiana.

By Kan Hyeong-woo (hwkan@heraldcorp.com)