General Motors has made a significant decision regarding its stake in the Ultium Cells battery plant in Lansing. On Monday, the company announced that it will sell back its investment in the yet-to-open plant to its joint venture partner LG Energy Solution. This move aligns with GM CEO Mary Barra's earlier statement about becoming more prudent in capital allocation to match production capacity with demand.

GM's Strategic Shift in Battery Plant Investment

Reason for Selling Stake

GM is selling its stake in the Ultium Cells Lansing facility as it believes it can fulfill the demand for its electric vehicles using the two joint-venture battery cell plants in Warren, Ohio, and Spring Hill, Tennessee. The cells produced at these plants power various GM electric models such as the Chevrolet Silverado EV, GMC Sierra EV, and more. "Our EV profitability is rapidly improving thanks to our strategic decision to build battery cells in the US with LG Energy Solution. It will take years for some competitors to reach this level of performance," said GM CFO Paul Jacobson. GM spokesman Kevin Kelly also revealed that LG Energy will use the plant's capacity to make battery cells for another automaker's EVs, although the customer remains unidentified.

Currently, Ultium Cells makes pouch battery cells. However, prismatic cells offer several advantages. They can hold more energy, reduce electric vehicle weight, and cost less as they are easier to manufacture with fewer components. Kurt Kelty, GM vice president of battery cell and pack, emphasized the importance of optimizing battery technology by developing the right chemistries and form factors. "By extending our partnership with LG Energy Solution, we are taking a crucial step towards these goals," he stated.

Jobs and Future Operations

Ultium Cells Lansing currently has nearly 100 employees. When GM initially announced the plant, it was expected to create 1,700 jobs once operations began early next year. A person familiar with the transaction confirmed that LG Energy is committed to maintaining this job figure. Sophia Kim, LG Energy Solution spokesperson, said they are in discussions with GM to acquire the plant and will make an announcement once finalized. This acquisition is part of their strategic objective to optimize investments in North America and meet the needs of global automakers.

GM first revealed the plan to build this plant in January 2022 as part of a $7 billion investment in four Michigan manufacturing facilities. The plant construction is nearly complete, and LG Energy Solution will have immediate access to start installing equipment. The transaction is expected to close in the first quarter, and it will not change GM's ownership in the Ultium Cells joint venture with LG Energy Solution.

New Battery Cell Technology

Regarding the prismatic cell technology to be developed under the new agreement with LG Energy, GM has not announced when these cells will be in production or where they will be made. But they will play a crucial role in powering future GM EVs as part of the company's strategy to diversify its supply chain. Prismatic cells are flat and rectangular with a rigid enclosure, allowing for space-efficient packaging within battery modules and packs. They hold more energy than pouch cells and are easier to manufacture.

LG Energy has extensive experience in prismatic cell production and a patent portfolio on battery design and manufacturing technologies. This expertise will enhance EV ownership, as Kelly mentioned. GM will continue to use the Ultium Cells plants in Ohio and Tennessee, which produce pouch battery cells, to meet the growing demand for its electric vehicles.