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Mon, February 6, 2023 | 05:20
Companies
LGES reportedly refuses GM's request to build 4th battery plant
Posted : 2023-01-24 15:18
Updated : 2023-01-25 17:16
Park Jae-hyuk
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General Motors CEO Mary Barra, right, poses with Kim Dong-myung, head of LG Energy Solution's advanced automotive battery division, during an event to announce that the U.S. firm will make a $7 billion investment in electric vehicle and battery production in Michigan, in this January 2022 file photo. AFP-Yonhap
General Motors CEO Mary Barra, right, poses with Kim Dong-myung, head of LG Energy Solution's advanced automotive battery division, during an event to announce that the U.S. firm will make a $7 billion investment in electric vehicle and battery production in Michigan, in this January 2022 file photo. AFP-Yonhap

Korean battery makers begin to have greater bargaining power than US carmakers

By Park Jae-hyuk

The indefinitely shelved plan of General Motors to build a fourth electric vehicle (EV) battery plant with LG Energy Solution (LGES) has proven once again that Korean battery manufacturers are starting to have greater bargaining power than their global clients, according to industry officials, Tuesday.

Last Friday, the Wall Street Journal reported that talks on the construction of another battery plant for Ultium Cells, a joint venture between LGES and GM, ended without an agreement, as the Korean firm remained skeptical about the project.

LGES' lukewarm stance was attributed to the uncertain macroeconomic outlook and a conflict with its U.S. partner over how to respond to a unionization drive by workers at Ultium Cells' Ohio factory.

GM said in a statement, "We've been very clear that our plan includes investing in a fourth U.S. cell plant, but we're not going to comment on speculation," and LGES said, "Discussions on a fourth plant remain ongoing, but no decision has been made." However, the joint venture is highly unlikely to result in another factory being built, given that the U.S. carmaker is said to be considering looking for another partner.

Even before its cooperation with GM became uncertain, LGES has been diversifying its foreign partners, announcing plans to invest in the North American market with Stellantis and Honda. The battery manufacturing unit of LG Group is also reportedly replacing SK On for the construction of Ford Motor's EV battery plant in Turkey.

Securities analysts expect global carmakers to be more desperate for partnerships with Korean battery manufacturers.

"Korea's three battery manufacturers are the only options for global carmakers to produce EVs in compliance with the U.S. Inflation Reduction Act," Hi Investment & Securities analyst Chung Won-suk said. "Korean battery makers will be more profitable as they are getting greater bargaining power than carmakers."

SK On's highly probable decision to drop its plan to build a plant in Turkey with Ford is also considered to be intended to take advantage of the seller's market, which refers to market conditions in which demand exceeds supply.

"As the secondary cell market has transformed into a seller's market, it will be more favorable for battery makers to win orders," KB Securities analyst Chun Woo-je said. "Korean firms are focusing more on investments in the U.S."


Emailpjh@koreatimes.co.kr Article ListMore articles by this reporter
 
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