Shifting EV demand has been a hard target for automakers to hit, leading some to fall back on hybrids and other vehicles to bridge the gaps in sales. General Motors was one of the first to announce a shift toward more affordable hybrids and PHEVs, but the company is taking an even more forceful action to get back on track.
GM said it would offload one of its four U.S. battery plants, saying that it could meet demand with three facilities. The automaker’s battery manufacturing partner, LG, will take ownership of the plant, which is under construction near Lansing, MI. GM noted that it expected to recover its $2.6 billion investment in the plant.
General Motors CFO Paul Jacobson said, “Our EV profitability is rapidly improving thanks in part to our strategic decision to build battery cells in the U.S. with LG Energy Solution. It will be years before some of our competitors approach this level of performance. We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital efficient manner. When completed, this transaction will also help LG Energy Solution meet demand by leveraging capacity that’s nearly ready to come online and it will make GM even more efficient.”
Reading a little deeper into this situation, it’s reasonable to assume GM is preparing for the upcoming Trump presidency, which will almost certainly bring an end to the federal EV tax credits. Automakers’ rush to localize production for the credits could all be for naught if that happens, making GM’s decision to divest from one planned factory look smart.
[Images: GM]
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Source: The Truth About Cars
