**Michigan**: LG Energy Solution announced plans to buy General Motors’ entire stake in their electric vehicle battery joint venture for $2 billion. The move aims to enhance manufacturing efficiency and support new supply agreements, including a decade-long partnership with Toyota for battery production.
On Tuesday, LG Energy Solution (LGES) announced that it will acquire General Motors’ entire stake in their joint venture focused on electric vehicle batteries, based in Michigan, for approximately $2 billion. This acquisition is expected to be finalised by May 31 and includes all assets associated with the Ultium Cells battery plant located in Lansing. The company has noted that the final deal value may be subject to change following the completion of due diligence.
The acquisition is anticipated to alleviate investment burdens for new manufacturing facilities while enhancing operational efficiency across LGES’s existing plants in the United States. By securing full ownership of the Lansing facility, LGES aims to bolster its battery production capabilities in the U.S. and ensure robust supply commitments, which include agreements with major automakers such as Toyota.
General Motors (GM) decided to divest its stake in the Lansing facility amid a strategic reduction in its electric vehicle expansion plans. This decision was influenced by uncertainties regarding battery production and consumer tax credits established during the Trump administration. GM’s exit from the joint venture was first announced in December; however, the automaker will continue its collaboration with LGES through battery plants located in Ohio and Tennessee.
Originally, LGES and GM intended to operate the Michigan plant as a 50:50 joint venture. Now, with LGES stepping into complete ownership, the company is set to streamline its manufacturing processes in the U.S. and significantly cut the requirement for additional facility investments. LGES stated that the costs associated with this acquisition are already accounted for in its annual capital expenditure plan, which was revised earlier this year to reduce facility investments by 20 to 30 percent compared to the previous year.
The Lansing facility is expected to play a crucial role in fulfilling the demands arising from a recently confirmed agreement with Toyota. Under the ten-year supply agreement signed in 2023, Toyota will transfer its battery orders to the Lansing plant, where LGES will provide 20 gigawatt-hours of NCMA battery modules annually. This supply will support the production of approximately 200,000 electric vehicles.
In parallel to these developments, LG Chem, the parent company of LGES, reported facing financial challenges stemming from weaker demand for both petrochemical and battery materials. In the fourth quarter of 2023, LG Chem experienced a net loss of 899.2 billion won (equivalent to $613.3 million) alongside an operating loss of 252 billion won, representing a significant decline compared to its profits from the previous year. LG Chem maintains an 81.84% ownership stake in LGES, South Korea’s largest battery manufacturer.
Source: Noah Wire Services
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