Two companies reach long-term supply agreement
LG Chem, South Korea’s largest chemical company, announced on July 27 that it had reached an agreement for a long-term supply of cathode active material (CAM) to General Motors.
LG Chem is set to offer GM almost 1 million tons of CAM, the main elements for lithium batteries, which are sufficient to manufacture up to 5 million electric vehicles.
Ultium Cells, the joint venture between GM and LG Energy Solution, would take advantage of the substances. The latter is a subsidiary of LG Chem.
The supply would support GM’s ambitious goal of securing 1 million electric vehicle production capacity in North America by mid-decade, according to LG Chem.
The two companies said that they would try to localize CAM production in North America by the end of 2025.
“Based upon a close collaboration with customers, LG Chem will further strengthen its position as a global leader in the market by producing the world’s best cathode materials,” LG Chem CEO Shin Hak-cheol said.
GM Vice President Jeff Morrison also welcomed the partnership.
“This agreement builds on GM’s commitment to creating a strong, sustainable battery raw material supply chain to support our fast-growing EV production needs,” Morrison said.
“LG Chem has demonstrated technical expertise, high-quality and mass production capabilities of cathode active materials over the last decade. At the same time, this agreement demonstrates GM’s commitment to strong supplier relationships and compliments our many other recent EV supply chain announcements.”
Morrison added that GM had contractual commitments secured with strategic partners for all battery raw materials to support its goal of 1 million units of electric car capacity by 2025.
Observers pointed out that more and more automakers would try to secure stable sources of battery supply.
“The demand for battery packs would outstrip that of its supply over the next several years,” Prof. Kim Pil-soo at Daelim University said.
“Against this backdrop, automakers are pulling out all the stops to secure stable supply sources. GM has found its partner in LG.”