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General Motors teams up with LG Chem to jump-start its clean-tech future

The companies say the $2.3 billion electric battery operation will create 1,100 jobs near Lordstown, Ohio.

General Motors chief executive Mary Barra speaks recently in Detroit. (Paul Sancya/AP)

General Motors announced a joint venture Thursday with South Korea-based LG Chem to manufacture electric vehicle batteries in northeast Ohio, a significant step for the nation’s largest automaker in its bid to electrify its future offerings.

The companies said their $2.3 billion investment will create 1,100 jobs near Lordstown, Ohio. It’s the same area where General Motors in November sold a shuttered manufacturing facility to Lordstown Motors, a company seeking to build battery-electric pickups.

The joint venture, coupled with the sale to Lordstown Motors, “positions Northeast Ohio and the Mahoning Valley as a major hub for technology and electric vehicle manufacturing,” GM said in a news release.

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GM chief executive Mary Barra announced the plan during a conference call, and the companies said the venture would be an equal split.

What you’re hearing from General Motors is a commitment to electric vehicles,” said Barra, who later noted, “There’s still going to be a demand for internal combustion vehicles.”

GM is in a fierce battle to catch up with U.S. rivals in the electric vehicle space, after Silicon Valley-based Tesla cornered the early-adopter market and Ford recently announced a Mustang Mach-E electric variant to great fanfare in Los Angeles.

Though consumers have been slow to adopt the technology so far, the electric vehicle market is expected to grow substantially in coming years — as automakers introduce mass-market electric vehicles with longer ranges at lower costs. According to analysis from CFRA Research, automakers are expected to introduce 25 new electric models in the United States alone next year. The shift is also creating a demand for lithium-ion batteries. Tesla aims to meet global demand with its Gigafactory 3, under construction in Shanghai.

Already, Tesla has overtaken luxury sedans with sales of its electric Model 3, although many consumers are also turning to SUVs. And many luxury car manufacturers are banking on electric SUVs, crossovers and trucks as the potential future of the industry.

About a decade ago, GM introduced many customers to electrification with its Chevrolet Volt, the since-discontinued sedan that went a short range on battery-only power before a gas engine kicked in to generate power for long-distance trips. Chevy went fully electric with its Bolt, a longer-range car that ran only on battery power, but sales have paled in comparison with Tesla’s similarly priced Model 3.

GM has significant catching up to do. The CFRA analysis predicted electric vehicles would make up 2 percent of GM’s sales by 2030, less than its Big Three competitors Ford and Chrysler and substantially less than European automakers such as BMW, Mercedes and Volkswagen.

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Barra said the combined expertise of the companies could accelerate electric vehicle adoption and leadership, as GM seeks to add 20 electric vehicle models to its fleet by 2023. The company said the facility would supply many projects in the near and distant future, such as a battery-electric pickup slated to arrive in 2021.

The complex also would have the flexibility to expand to meet demand. The companies aim to produce batteries that will maximize vehicle range at a lower cost than competitors through economies of scale. Other battery factories in the United States include another LG Chem facility in Michigan and Tesla’s Nevada Gigafactory.

She added that it would be up to workers whether the facility was represented by a union such as United Auto Workers. GM said its Ohio facility is expected to break ground in mid-2020.

“This is something the people of Ohio and the state has earned because of their capabilities,” Barra said. “Clearly we want to tap into the great workforce that’s in Ohio.”