G.M. Venture to Create Ohio Battery Plant and 1,100 Jobs
After idling its car plant in Lordstown, Ohio, this year, General Motors promised that it would bring jobs back to the once-mighty manufacturing region.
On Thursday, its plans began to take a shape: It will build a factory to make electric-vehicle batteries along with a South Korean partner, LG Chem.
The companies said they planned to invest a total of $2.3 billion in a joint venture that would produce battery cells. G.M. and LG Chem would have equal stakes in the business.
Executives said the venture would set up a plant in the Lordstown area that would create more than 1,100 jobs. Groundbreaking is expected in the middle of next year.
“We think as we do this in a joint fashion it is going to accelerate our ability to win in the electric vehicle space,” G.M.’s chief executive, Mary T. Barra, said at a news conference. “I absolutely believe this is a critical point, with LG Chem and G.M. working together to drive affordability.”
The cost of battery packs is one of the major challenges of luring mainstream consumers to electric vehicles. Tesla, the leading seller of electric cars, makes its own battery packs in a joint venture with Panasonic at a giant factory in Nevada. Even with the economies of scale of that plant, however, most Tesla cars still sell for $10,000 or more above the average new-car price of about $35,000. And Tesla has yet to show it can make money consistently.
“It’s not at all clear there is going to be much demand for E.V.s, at least in North America,” said Sam Abuelsamid, an analyst at Navigant Research. “There’s probably going to be more demand in Europe and China, but if they can get the cost down to parity with internal combustion vehicles, then there may be potential.”
LG Chem is a major supplier of lithium-ion batteries to the auto industry and other sectors, with clients including Volvo. A financial filing in South Korea indicated that its investment in the joint venture would occur over four years.
G.M. is making a major push into electric vehicles, including 20 battery-powered models by 2023. It aims to sell one million such vehicles globally by 2026. Ms. Barra said G.M. expects to introduce a new Chevrolet electric car next year, and an electric truck in 2021. Its current model, the Chevrolet Bolt, is a compact car that has attracted modest interest from car buyers. G.M. sells roughly 1,500 Bolts a month in the United States, compared to the 30,000 cars Tesla tends to sell monthly around the world.
Other traditional automakers are also looking to expand their electric vehicle offerings. In November, Ford Motor unveiled an electric sport-utility vehicle styled to resemble its Mustang sports car. Called the Mustang Mach E, it will be assembled at a plant in Mexico, with battery packs coming from a factory in Poland. Ford is planning to introduce more than a dozen electric models over the next five years, including a battery-powered version of its popular F-150 pickup truck.
Ms. Barra said G.M. is working to to offer electric vehicles to help combat climate change. “G.M. believes in the science of global warming,” she said.
G.M has repeatedly announced its intent to set up a battery-making plant with a partner that would bring back jobs to the Lordstown area, where it abandoned production in March.
The shutdown of the Lordstown plant, which most recently made the Chevrolet Cruze, was traumatic to Ohio’s Mahoning Valley, between Cleveland and Pittsburgh. President Trump, who promised to increase factory jobs and has called on automakers to move production from Mexico to the United States, has heaped criticism on G.M. for closing the plant.
On Thursday, Ms. Barra said G.M. had informed the White House of its battery-plant plans, but declined to comment on how the administration reacted to the news. “It’s probably important that they comment for themselves,” she said.
While many Lordstown workers accepted jobs at other G.M. plants, the factory’s fate hovered over rancorous contract talks with the United Automobile Workers union. The contract impasse resulted in a 40-day nationwide walkout in the fall, the longest against G.M. in almost half a century.
The union’s settlement allowed the company to close the plant permanently, but G.M. committed investing in other American factories. The jobs foreseen at the battery plant are far fewer than the 3,000 that the G.M. assembly plant once employed.
Earlier accounts said the pay at the battery plant was likely to be about $17 an hour, well below the $31 that many assembly workers made in Lordstown. Ms. Barra said that wages at the battery plant would be around the same levels U.A.W. workers earn at component plants, which tend to fall between $10 and $15 an hour, below the top union wage of $32 an hour.
“We have to be competitive,” she said. “But these will be very good paying jobs.”
After the Lordstown plant was idled, G.M. reached an agreement to sell it to a start-up, Lordstown Motors, which plans to produce electric pickup trucks. Lordstown Motors has said it expects to hire about 400 workers next year at wages comparable to what U.A.W. members make at major auto companies.
Su-Hyun Lee contributed reporting.