General Motors and South Korea’s LG Chem are teaming up for a $2.3 billion dollar investment for a joint venture to produce battery cells in electric vehicle.
The money, which will be invested by 2023, will help build a battery cell factory and create 1,100 new jobs in the Lordstown area. The plant is expected to start construction by the middle of next year.
The plant is “another important and significant step toward an all-electric future,” said GM CEO and Chairman Mary Barra.
“The new facility will help us scale production and dramatically enhance (electric vehicle) profitability and affordability,” she said.
LG Chem Vice Chairman and CEO Hak-Cheol Shin said the joint venture shows the important relationship the two companies are building.
“The joint venture that we are signing today is more than just a collaboration,” he said.
“It marks the beginning of a great journey that will create an emission-free society and transform the global automotive market into an eco-friendly era.”
The collaboration and new plant are a big win for local workers. GM shut down an assembly plant in the area earlier this year. That put 8,000 people out of work.
At the time, Cleveland State University’s Center for Economic Development estimated the closure would cut $3 billion in total economic output for the area. The estimate included the loss of $270 million in lost wages. What’s more local businesses would also lose out about $600 million of value-add to the economy. The impact would also be felt state-wide with the state and local governments losing $12 million in tax revenue.
Barra said the jobs created through the new venture would not pay as well as those at the closed GM plant. But she noted they would be “very good paying jobs.”
The New York Times reported that the the battery plant jobs would likely pay abou $17 an hour. Workers at the closed GM plant earned about $31 an hour. Unionized workers at GM component plants earn between $10 and $15 an hour.
Barra also said GM plans to introduce a new Chevrolet electric car in 2020. The year after it’s planning on putting out an electric truck. But it’s not certain how big the demand for electric vehicles is in the U.S.
“It’s not at all clear there is going to be much demand for E.V.s, at least in North America,” Sam Abuelsamid, an analyst at Navigant Research, told the New York Times.
“There’s probably going to be more demand in Europe and China, but if they can get the cost down to parity with internal combustion vehicles, then there may be potential.”
Barra said Ohio’s state government provided incentives for the new venture, but she did not offer details. She also said the Trump administration was told about the agreement with LG Chem. But she did not say how the White House responded. She told reporters she would leave the administration to comment.
President Donald Trump criticized GM’s decision last year to shutdown four U.S. plants, including the Lordstown plant.