(Reuters) -General Motors Co and Samsung (KS:005930) SDI are set to announce as early as Tuesday the plan to build a joint venture electric vehicle battery manufacturing plant in the U.S., as the automaker diversifies its component suppliers, sources said.
The news comes as South Korean President Yoon Suk Yeol is in Washington to meet President Joe Biden on what is the first state visit to the U.S. by a South Korean leader in 12 years.
Yoon, who has made business opportunities a cornerstone of his foreign policy visits, is accompanied on the U.S. visit by more than 100 executives from South Korea’s biggest companies, including Samsung Electronics (OTC:SSNLF) Executive Chairman Jay Y. Lee and Hyundai Motor Group Executive Chair Euisun Chung.
GM and Samsung SDI did not comment on the timing of the announcement. South Korean media reported plans for the potential GM-Samsung SDI JV last month.
A person at Samsung SDI said the South Korean company “would likely have more than one battery JV plant with GM in North America”, without giving details. The person declined to be identified as he was not authorized to speak to media.
Detroit-based GM, like other automakers, is looking to diversify its battery supply chain and secure capacity of components to support its electrification goals as it attempts to catch up with Tesla (NASDAQ:TSLA) Inc.
GM already has a joint venture (JV) in the U.S. with LG Energy Solution, and has been investing to ramp up cell production with the South Korean battery maker to take advantage of subsidies under the U.S. Inflation Reduction Act that aims to boost domestic manufacturing.
The U.S. Energy Department finalised a $2.5 billion loan to the GM-LG Energy JV late last year. The companies are building a $2.6 billion plant in Michigan, set to open in 2024, one of three JV Ultium Cells LLC plants.
They dropped plans for a fourth plant in New Carlisle, Indiana but GM could still pick the site for a battery plant with another partner, Reuters reported in January.
The new GM-Samsung SDI plant is expected to cost more than the Michigan battery plant, but no location will be immediately announced, the sources with knowledge of the matter said on condition of anonymity as the details are not public.
GM said last year it expects to build 400,000 electric vehicles (EVs) in North America from 2022 through mid-2024 and increase capacity to 1 million units annually in North America in 2025. Sources say GM is considering if it will eventually need at least two additional EV plants to meet future EV demand.
Biden, during a visit to Samsung in South Korea last year, urged companies to “enter into partnerships” with “American union members”, saying JVs “that manufacture electric vehicle batteries would be made stronger by collective bargaining relationships” with U.S. unions.
Hyundai Motor Group and SK On, a battery unit of SK Innovation Co Ltd, plan to set up a battery JV in the U.S. state of Georgia, in an investment worth a combined about $4.86 billion, the two companies said on Tuesday.
Last year, car maker Stellantis NV and Samsung SDI said they would invest more than $2.5 billion to build a new JV battery plant in Kokomo, Indiana.
Stellantis and LG Energy said in 2022 they would invest $4.1 billion for a JV battery plant in Canada.
Most South Korean battery-related shares were down on Tuesday, with Samsung SDI shedding 3% as of 0407 GMT, versus a 1.8% drop in the broader market.
