The Latest Auto Firm To Build An Expensive EV Battery Factory Is Stellantis

With the growth of global electric vehicle (EV) industry, auto makers are now rushing to build facilities to allow them to make the powerful batteries required to power EVs.

One of the latest in that race is partnership between Stellantis, a new entity that came into being last year by the merger of Fiat Chrysler and PSA Group, and LG Energy Solution, a battery manufacturer of South Korea, which will jointly manufacture lithium-ion batteries for the North American market, the two companies said on Monday.

The plans of the two companies is to build a factory that will have total annual installed capacity to produce 40 gigawatt hours, the companies said in a press release. The companies are yet to decide on the exact location of the facility but they have announced that work on building the unit will start in the second quarter of 2022 and has set a target of beginnignf op production by 2024.

The manufactured batteries will be used in Stellantis’ electric cars in factories of the company throughout North America.

“Today’s announcement is further proof that we are deploying our aggressive electrification road map and are following through on the commitments we made during our EV Day event in July,” said Stellantis CEO Carlos Tavares.

Work on their own electric vehicle battery plants has already been initiated by General Motors and Ford, Stellantis’ competitors in the American market.

Two such EV battery factories are being built by GM through joint ventures with LG units and one of the factories is based in Lordstown, Ohio, which is expected to start making batteries early next year, while the other is in Spring Hill, Tennessee, that will be adjacent to an existing GM assembly plant. The cost of each plant is estimated to be $2.3 billion.

The batteries used in GM’s electric vehicle Chevrolet Bolt which had to be recalled because of a threat of fire were made by LG. the recall was costly for the car maker as almost all Bolts sold since their debut in 2016 were recalled. The batteries powering these vehicles were made in South Korea. $1.9 billion of the recall’s $2 billion cost will be contributed to GM by LG.

Its plans for construction of battery plants in Kentucky and Tennessee with LG rival SK Innovations, as well as new electric vehicle assembly plants was announced last month by Ford. The new plants will be built with an investment of $11 billion in total.

The race to ramping up production plans for electric vehicles is being made by automobile manufacturers in order to be able to meet the increasingly stringent environmental regulations as well as the rising demand for the vehicles by consumers. Compared to conventional combustion engines, there are less moving parts in electric vehicles and hence can be made at a cheaper cost as the number of hours of labour that goes into assembling them gets reduced significantly. However, the batteries that power the vehicles make up a large part of the electric vehicle’s construction projects.

Because many of the auto companies are forging joint ventures with companies in other businesses for building battery plants, therefore the employees in those factories is likely not to be represented by the United Auto Workers union in the United States, which is a concern for the union as they it is worried about job losses that could happen because of the shift to electric vehicles.

An impending shortage of batteries required to power cars, auto companies need to build new battery plants. In the short term, there can be upward pressure on battery prices because of a shortage of inventory which in turn will result in continued higher costs of EVs compared to traditional gasoline powered cars.

(Adapted from CNN.com)

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