Electric-vehicle sales growth may be slowing, but General Motors is determined to lead the way in the electric vehicle (EV) market. On Wednesday, GM announced a significant partnership with LG Chem—a Seoul-based global supplier of batteries for electric and hybrid vehicles. The two companies have signed a “long-term cathode material supply contract,” emphasizing their dedication to creating a sustainable battery EV supply chain.
Creating a Sustainable Battery EV Supply Chain
Cathodes play a crucial role in facilitating the flow of electricity within a battery. In the realm of EVs, cathode materials commonly include nickel, iron, or cobalt. By partnering with LG Chem, GM aims to solidify its commitment to developing a strong and sustainable battery EV supply chain that can support the increasing demand for electric vehicles.
Jeff Morrison, GM’s Vice President of Global Purchasing and Supply Chain, expressed the company’s dedication in a news release, stating, “This contract builds on GM’s commitment to create a strong, sustainable battery EV supply chain to support our fast-growing EV production needs.”
Strengthening the North American Supply Chain
One notable aspect of this partnership is that the collaboration between GM and LG Chem will primarily take place in Tennessee. This alignment strengthens the North American supply chain at a critical time for the industry. Moving forward, local production of battery materials will be crucial not only for GM but for the entire industry. This approach allows EVs manufactured using these materials to qualify for purchase tax credits as part of the Inflation Reduction Act. Currently, most EV materials are made or processed in Asia.
The Impact of the Contract
The recently signed contract is substantial, involving 500,000 tons of material. While this quantity may not carry much weight for investors or car buyers, it has the potential to generate an impressive output. LG Chem estimates that the agreed-upon amount of materials will be sufficient to manufacture approximately 5 million EVs.
As the electric vehicle market evolves, partnerships like the one between General Motors and LG Chem will play a pivotal role in shaping the future of sustainable transportation. With its focus on developing a robust battery EV supply chain, GM remains committed to driving innovation and meeting the rising demand for electric vehicles worldwide.
Tesla’s Battery Power
Tesla’s Model 3 standard-range vehicle boasts an impressive battery pack that contains approximately 3,000 batteries. This means that with around 500,000 tons of cathode material, an estimated 15 billion batteries could be produced.
A Long-Term Agreement
It is important to note that the delivery of this material will occur over a significant period of time. The agreement spans from 2026 to 2035.
GM’s Steadfast Commitment to Electric Vehicles
General Motors (GM) remains committed to expanding its electric vehicle (EV) lineup, even though the rate of EV adoption in the U.S. has slowed down. In 2023, all-battery EV sales in the U.S. reached 1.2 million units, representing a notable 46% increase. GM contributed to this figure by selling approximately 76,000 EVs, enjoying a 93% year-over-year growth. While these results are commendable, GM had initially set more ambitious targets for itself.
A Delayed Projection
GM had originally aimed to produce 400,000 battery-electric vehicles in North America by mid-2024. However, it seems that GM will likely accomplish this milestone by mid-2025 instead.
GM’s Financial Outlook
Ahead of Wednesday’s trading session, GM’s stock already experienced an 8% decline over the past year. Investors have expressed concerns about the slower EV adoption rate and higher interest rates. Nonetheless, GM remains optimistic about its financial performance and expects an operating profit of approximately $13 billion in 2024, surpassing the $12.4 billion achieved in 2023.