By Mike Colias
General Motors Co. and South Korea's LG Chem plan to build a large battery factory in Ohio, the latest example of an auto maker plowing money into the development of electric cars.
The new plant would be among the world's biggest producing battery cells for electric cars, rivaling Tesla Inc.'s Gigafactory in the Nevada desert. GM and the LG Corp. subsidiary said Thursday they would invest a combined $2.3 billion in their joint venture.
Auto makers have been joining forces with battery makers as they gear up to spend about $225 billion to develop new electric-vehicle models over the next several years, according to consulting firm AlixPartners LP. Tightening fuel-efficiency and emissions regulations, especially in China and Europe, are prompting auto makers to electrify their vehicle lineups.
The GM-LG factory would be built near Lordstown, Ohio, where GM last spring closed a vehicle-assembly plant that in recent years employed roughly 4,000 workers. A startup company has acquired that facility, where it plans to make electric trucks.
GM said the new battery plant, which would employ more than 1,100 workers, would be among the world's largest battery-cell factories, with capacity to manufacture enough batteries annually to produce more than 30 gigawatt hours.
Tesla Chief Executive Elon Musk said this spring that the company's Gigafactory in Nevada has a theoretical capacity for 35 gigawatt hours, but constraints from battery partner Panasonic Corp. of Japan have limited output to about 24 gigawatt hours.
GM and LG Chem will co-develop and assemble battery cells to be used in the auto maker's electric vehicles, including a battery-powered truck GM plans to introduce in the fall of 2021.
Construction of the factory is expected to begin in mid-2020.
The Wall Street Journal this fall reported that GM was planning to invest in a joint-venture battery plant in the Lordstown area. GM discussed the project with United Auto Workers officials during contract talks as a way to blunt the impact of the Lordstown factory's closure.
Though compensation at the plant wasn't part of the labor contract, GM and the union had discussed pay in a range of $15 to $17 an hour, in line with wages at other battery plants, people familiar with the matter have said.
The company said Thursday it will be up to the workers to decide whether they want to unionize. The UAW didn't have an immediate comment.
Union officials have expressed concern that the expansion of electric vehicles poses a long-term threat to auto-factory employment, because they require less manpower to produce than gasoline-powered cars.
Battery-cell plants are highly automated and require different skills than those needed at traditional car factories, said Menahem Anderman, a California-based battery consultant. The plants' employees include test technicians, computer programmers and equipment engineers.
Car companies generally have contracted with suppliers such as LG Chem for the lithium-ion cells that go into large battery packs for use in electric vehicles. Lately, though, the auto makers have been forging closer ties with battery companies to lower costs and secure future battery supplies.
Volkswagen AG said in June it will spend $1 billion on battery production, including a joint-venture investment with a Swedish startup. Toyota Motor Corp. signed a battery-production joint venture with Panasonic in January.
Mr. Anderman said by pooling their investment in the Ohio plant, GM and LG are hedging their bets on the U.S. electric-vehicle market, which is expected to develop more slowly than in Europe and China.
GM Chief Executive Mary Barra said the joint venture with LG will speed GM's electric-vehicle development and reduce costs.
"The new facility will help us scale production and dramatically enhance EV profitability and affordability," Ms. Barra told reporters Thursday.
Analysts say the supply of lithium-ion batteries could be constrained in coming years as more electric models hit showrooms, prompting car companies to lock in supply contracts.
Despite Toyota's Panasonic joint venture and the car maker's partnership with Chinese battery giant Contemporary Amperex Technology Co., the Japanese auto giant is still finding it hard to build enough batteries to keep up with rising demand for hybrids, which use a combination of gasoline and battery power.
"We can assemble the cars," said Bob Carter, Toyota's North American sales chief, in an interview Thursday. "The assembly is not the bottleneck. It's the battery itself."
GM plans to introduce at least 20 electric models globally by 2023. Many of those will be for the China market, where the government has put manufacturer quotas on sales of vehicles that don't produce tailpipe emissions.
LG Chem supplies the cells that go into the Chevrolet Bolt, a small electric car that GM introduced in 2016 as a potential competitor for Tesla's Model 3. Both cars were billed as the industry's first attempts at a relatively affordable vehicle with a range of more than 200 miles on a single charge.
--Ben Foldy and Tim Higgins contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com
(END) Dow Jones Newswires
December 05, 2019 17:44 ET (22:44 GMT)Copyright (c) 2019 Dow Jones & Company, Inc.