American legacy automaker General Motors has tapped South Korean chemical giant LG Chem for battery materials supply over the course of ten years. According to the press release, the investment amount costs a whopping KRW 25 trillion ($19 billion).
Supply contract
LG Chem announced on February 7 its attainment of a long-term cathode material supply deal with General Motors, aligning with the comprehensive agreement the two players inked in July 2022.
This supply deal would reportedly cost GM a total of 24.7 trillion, or approximately $18.6 billion. The contract will officially take effect on 2026 through 2035.
As part of the deal, LG Chem must deliver over 500,000 tons of cathode materials to support GM’s electric vehicle batteries. The South Korean automaker noted that it would be sufficient to support 5 million high-performance electric vehicles with a 500 km range between charges.
“By strengthening our strategic cooperation with GM, we will jointly lead the North American EV market to a sustainable future. We aim to create unique customer value through world-class productivity and the expansion of our global production bases.”
LG Chem CEO Shin Hak-cheol
Local production
LG Chem will leverage its new local production plant in Tennessee to produce General Motors’ cathode materials starting in 2026.
LG Energy Solution and GM’s joint venture Ultium Cells will primarily benefit from the NCMA (nickel, cobalt, manganese, aluminium) cathode materials produced at the Tennessee factory.
Given that the supply deal is a direct contract with GM, the American automaker can also employ the cathode materials in its other electric vehicle-related initiatives.
This local production will enable LG Chem to ensure that GM can benefit from up to $7,500 federal tax credits under the Inflation Reduction Act in the US.
“This contract builds on GM’s commitment to create a strong, sustainable battery EV supply chain to support our fast-growing EV production needs. Importantly, this work with LG Chem will happen in Tennessee and strengthens the North American supply chain at a critical time for the industry.”
Jeff Morrison, GM vice president, Global Purchasing and Supply Chain
About the Tennessee factory
LG Chem officially kicked off the construction of its Tennessee factory on December 2023, which is currently the largest cathode plant in the US.
The South Korean company aims to utilize the factory as its communication base with its clients by producing North American-sourced cathode materials for electric vehicle batteries.
It also plans to continuously improve the local factory’s competitiveness through engineering technology innovations to reach the world’s highest annual production output of 10,000 tons per line.
The Tennessee battery cathode will officially start mass production in 2026, coinciding with the recently announced supply deal with GM.
