General Motors and Samsung SDI plan to invest a combined $3bn to build a new plant in the US, the first time the carmaker has selected the South Korean company to manufacture batteries for its electric vehicles.
The new plant is scheduled to open in 2026 and will require hiring “thousands” of workers to make two types of battery cells using nickel-rich chemistries, the companies said on Tuesday, in an announcement that coincides with a visit to Washington by South Korea’s president Yoon Suk Yeol.
The decision to partner with Samsung marks an effort by GM to diversify its battery supply chain away from LG with whom the US carmaker jointly owns and operates three battery plants.
GM chief executive Mary Barra said choosing Samsung would improve the resiliency and costs of the carmaker’s supply chain while allowing it to scale faster. The company plans to build 400,000 EVs in the US in the first half of next year and then hit 1mn annually starting in 2025.
“Having multiple strong cell partners will allow us to expand into new segments more quickly,” she said on the company’s earnings call, adding that it would also allow GM to grow its “annual EV assembly capacity in North America significantly above 1mn units”.
The joint venture with Samsung follows a recall of 140,000 Chevrolet Bolts in 2020 after flaws in batteries manufactured by LG Chem caused fires in several Bolt vehicles. The battery maker eventually paid GM $1.9bn towards the cost of the recall.
Barra on Tuesday also said the company will stop making the Bolt and Bolt electric utility vehicle at the end of the year. GM plans to convert the Michigan factory that makes the vehicles into a one focused on making electric versions of its Chevrolet Silverado and GMC Sierra trucks.
Converting the factory will give GM the capacity to build 600,000 electric trucks a year, Barra said. Sales of trucks and sport utility vehicles have outpaced car sales in the US, and the company sold 19,700 Bolts and 127,000 of the gas-powered version of the Silverado in the first quarter.
The announcements accompanied quarterly results from GM that included a $500mn boost to its profit guidance for the year, driven by strong customer demand and better production as well as cost reductions. The company said it expected operating profit to range from $11bn to $13bn, up from $10.5bn to $12.5bn.
GM reported first-quarter operating earnings of $3.8bn. Though the carmaker earned 6 per cent more in the same period last year, the result was still above Wall Street’s expectation of $3.2bn.
“We’re feeling confident about 2023,” said chief financial officer Paul Jacobson.