Home News GM reaches $18.8 billion deal with LG Chem to obtain enough materials to produce 5 million electric vehicles

GM reaches $18.8 billion deal with LG Chem to obtain enough materials to produce 5 million electric vehicles

by SuperiorInvest

Key takeaways

  • General Motors reached an $18.8 billion deal for LG Chem to supply GM with cathode materials used in the production of electric vehicle (EV) batteries.
  • Starting in 2026, GM will receive enough cathode materials such as nickel, cobalt, manganese and aluminum from LG Chem to produce about 5 million electric vehicles.
  • The deal comes as GM works to strengthen its position in the electric vehicle market.
  • Tesla currently dominates the US electric vehicle market, but the Chevrolet Bolt EV/EUV, made by GM, accounted for 5.2% of electric vehicles sold in 2023, making it the third-largest vehicle model best-selling electric cars in the US last year, according to Kelley Blue Book. .

General Motors (GM) shares rose 2% in intraday trading Wednesday after reaching a $18.8 billion deal for LG Chem to supply the Big Three automakers with materials used to produce electric vehicle batteries ( EV), in the latest move by GM to promote its position in the electric vehicle market.

LG Chem will supply GM with more than 500,000 tons of cathode materials such as nickel, cobalt, manganese and aluminum, which the Korean chemical company says are enough to produce approximately 5 million electric vehicles.

The $18.8 billion (25 trillion Korean won) contract will begin in 2026 and last until 2035.

“This contract builds on GM’s commitment to creating a strong and sustainable battery electric vehicle supply chain to support our rapidly growing electric vehicle production needs,” said GM Vice President of Global Purchasing and Supply Chain , Jeff Morrison.

Morrison added that the deal would strengthen GM’s supply chain in North America “at a critical time for the industry.”

LG Chem will begin producing cathodes at its Tennessee plant in 2026, which the company says will be the largest cathode plant in the United States. Construction of the Tennessee plant began in late 2023.

Traditional automakers like GM face an uphill battle to transition to electric vehicles, with high inventories and concerns about profitability. Tesla (TSLA) currently dominates the US EV market and will capture more than 55% of the EV market by 2023, according to Kelley Blue Book.

However, GM has had some success in its transition to electric vehicles, as the Chevrolet Bolt EV/EUV accounted for 5.2% of electric vehicles sold in 2023. That made it the third best-selling electric vehicle model in the US last year, behind the Tesla Model Y and Model 3 which stood at 33.2% and 18.6%, respectively.

General Motors shares rose 2% to $38.81 per share at approximately 1:40 p.m. ET on Wednesday. The automaker’s share price is up 7.6% so far this year.

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