LG Chemicals is going to establish a joint venture with General Motors (GM), which is the top U.S. automaker, and construct a plant in Ohio.
LG Chem made an announcement on the 6th (U.S. time) that it signed a contract with GM CEO Mary Barra and LG Chem CEO Shin Hak-chul at GM Global Tech Center in Michigan on the 5th (U.S. time).
The joint venture will have a 50:50 stake, with the two companies contributing $850 million (1 trillion won) each, and gradually investing a total of 2.7 trillion won to secure production capacity of more than 30 GWh.
Construction of the plant site will begin in the middle of next year at Lordstown, Ohio, and mass-produced battery cells will be supplied to GM's next-generation electric vehicles.
The two companies set up a joint venture because GM, which is in need of stable supply of high-quality batteries, and LG Chem, which needs to take advantage of fast-growing U.S. market while minimizing the risk of large-scale investments in the battery sector.
The joint venture will help LG Chem secure a solid source of demand in the U.S. market, while GM will be able to reliably supply its high-quality batteries.
LG Chem has been selected as a partner for GM's joint venture because it has been recognized for the quality of electric vehicle batteries and their ability to mass-produce them as the two companies have been working together for the past 10 years.
In fact, LG Chem has been supplying batteries to GM's electric vehicle flagship models, Chevrolet Spark and Chevrolet Volt, since GM was selected as the sole supplier of batteries for the Chevrolet Volt, the world's first mass-produced electric vehicle launched in 2009.
"The combination of GM's manufacturing technology and LG Chem's battery technology will accelerate the transition to the electric vehicle era," said Mary Barra, president of GM.
"The establishment of the joint venture with GM is the beginning of a journey to lead the transformation into an eco-friendly car era beyond simple cooperation," LG Chem CEO Shin Hak-chul said. "We will further strengthen our global market leader status by supplying LG Chem's world-class battery technology skills, safety and reliability, and experiences in mass production to our customers."