to build a North American factory to manufacture materials for battery cathodes.
It’s a big step for GM, the car business, and even for the U.S. Shares of GM (ticker: GM) gained on the news, rising about 3.7% to a hair under $60 by midday on Wednesday. Shares closed up 0.4% at $58.06.
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GM has big plans for EVs: It wants to sell only electric vehicles by 2035. In the meantime, it an announced plans to spend $35 billion on vehicle development and manufacturing capacity to make that happen. Along with traditional assembly plants, GM plans to build battery factories with partner
That is where the new plant fits in. Right now, most cathode materials—cathodes and anodes are opposite sides of a battery that facilitate the flow of electricity—are manufactured in Asia. Bringing production to the U.S. saves costs and gives GM more control over supply and technological development.
“Our work with POSCO Chemical is a key part of our strategy to rapidly scale U.S. EV production and drive innovation in battery performance, quality and cost,” said Doug Parks, GM executive vice president, Global Product Development, Purchasing and Supply Chain, in GM’s news release. “We are building a sustainable and resilient North America-focused supply chain for EVs covering the entire ecosystem from raw materials to battery cell manufacturing and recycling.”
The cathodes EV investors hear about these days include elements such as iron, cobalt, nickel, and lithium. Those are the materials that will be fed into the new facility. Supplies of those elements are one more step back along the EV supply chain.
Cathode materials from the plant will flow into GM’s new battery factories, which will supply the automotive assembly operations. The supply-chain work, plus research and development by GM, is intended to drive costs down. That could help GM to produce a Chevy EV crossover—midway in size between a sedan and an SUV, starting at about $30,000 by mid-decade, as management has said it plans to do.
Cathodes represent “roughly one third to half the cost of the battery and it represents a very significant function in terms of driving capacity,” said CFO Paul Jacobson at an investment conference Wednesday. “This is the first of many announcements we’re talking about over the coming months and years as [GM’s] taking the long-term view along this journey to EV transformation.”
The plant will be operational around 2024. GM didn’t disclose a price tag, but the money for this plant is part of the $35 billion planned spending. GM says the plant will create hundred of jobs—positions that would have ended up overseas without local investment. The company hasn’t disclosed a location for the factory just yet.
Write to Al Root at firstname.lastname@example.org