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GM to Spend $30M on Volt Battery Assembly Plant

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General Motors (s GM) plans to invest $30 million into building a plant for assembling Chevy Volt battery packs, the automaker said today at the Automotive News World Congress in Detroit, Reuters reports. GM revealed earlier this month that it would manufacture the packs in Michigan with lithium-ion cells from South Korea’s LG Chem (s LGCL Y). The facility is just the latest development in a race between A123Systems, which lost the Chevy Volt cells deal, and GM to create a large-scale lithium-ion battery plant in the United States.

Although it will be a significant step for the emerging domestic EV battery industry, GM’s $30 million play for assembly-only (rather than manufacturing cells, too) contrasts with the $1.84 billion battery factory that A123Systems hopes to build in southeastern Michigan with loans from the Department of Energy. The difference highlights an opportunity for economic development that escaped Michigan when GM decided to have the Volt’s lithium-ion cells manufactured overseas (a point lost in many early reports, which hailed the move as a major Michigan win), rather than in its home state — despite up to $335 million in tax incentives for battery development, manufacture, and assembly.

That’s for the time being, at least. Brett Smith, assistant director for manufacturing, engineering and technology at the Center for Automotive Research in Ann Arbor, remains hopeful that cell-making will eventually come stateside. “With pack assembly in Michigan as the first step for G.M.,” he told the New York Times, “hopefully we’ll start to see a lot more activity on the cell manufacturing side as well.”

Of course, GM is hardly in a position to make big, long-term investments like the ones Michigan and A123 (on the federal buck) have planned. The company has said that it may need additional loans to survive an extended slump in demand, and Treasury Department loan requirements mean slowing progress on the Volt (which has already faced factory construction delays) is not an option.

11 Responses to “GM to Spend $30M on Volt Battery Assembly Plant”

  1. In the Know

    I think it is great that Michigan has targeted luring the production of lithium ion cells to its State. It is great that they have set up incentives.

    There is a fatal flaw. Wanting something is not enough. There are other States who would be much more well suited for these activities because of the skill base needed. There is more lithium ion knowledge outside the state of Michigan than in. When it comes to the federal funding, there should be no more basis of influence for Michigan than there should be for any other state. Obviously, the biggest potential customer in the state is willing to go to Asia for their supply.

    GM obviously wants to treat the sourcing of lithium batteries just like they would rear view mirrors. They had no more right to do this than Dell had the right to control Intel in the same way. Unfortunately many of the developers of electric cars have relatively small knowledge about what it takes to get into lithium ion production.

    Based on the new start-ups for creating electric cars, it seems apparent that creating the electric vehicle is more straight forward than making the batteries. Just like any companies could build their own computers, only a few could build the processors.

    If success is only going to come from being vertically integrated, then Fisker, Phoenix Motorcars, or Telsa have just as much right for having the lithium ion facilities built in their state. Most likely even more right since making electric cars is their business where GM should be working on their core business of ICE.