GM has partnered with LG Energy Solution to make Ultium batteries for the automaker’s new generation of EVs. Currently, it has four plants. One, Ultium Cells Shanghai, is operational in China. The other three are in the U.S.: The Ultium Cells joint venture is operational in Warren, Ohio, with two more manufacturing locations under construction in Spring Hill, Tennessee, and Lansing, Michigan. This week, though, GM announced that it will sell its stake in the Lansing facility to LG, with the deal expected to close in the first quarter of 2025.
So, why is GM backing out of the Lansing battery plant?
The EV Demand Trend
If you’ve been keeping up with automotive industry news, you’re probably aware that many automakers are making adjustments to their electrification plans. It seems many overestimated the rate of growth for EVs, and companies are delaying targets for complete electrification, as well as considering more hybrid offerings, either for the first time, or for longer than they had originally planned.
It’s Not A Bad Sign
Sure, divesting of one of its three U.S. Ultium plants is a symptom of less-than-expected EV growth, but it doesn’t really put GM in a bad spot. On the contrary, in fact. “GM’s decision to divest its stake in the Lansing facility reflects a pragmatic approach to market alignment and capital efficiency,” Paul Waatti, Director of Industry Analysis at AutoPacific told TopSpeed. “It balances long-term strategic goals with near-term financial realities, signaling both caution and confidence.”
After all, GM is still seeing growth in its EV sales, and already has one operational battery plant in the U.S., with another on the way. “Our EV profitability is rapidly improving thanks in part to our strategic decision to build battery cells in the U.S. with LG Energy Solution,” said Paul Jacobson, GM Executive Vice President and CFO in a statement. “It will be years before some of our competitors approach this level of performance.”
According to Waatti, “Essentially, GM is buying flexibility, allowing it to scale its EV business more in line with consumer demand while avoiding the risks of oversupply in a challenging market.”
GM’s EV Efforts Continue With LG As A Partner
GM expects to recoup the money it invested in the Lansing factory, which it can put to good use elsewhere. As Waatti told TopSpeed, “GM maintains access to critical battery technology and supply while freeing up capital for other priorities. Meanwhile, LG Energy Solution strengthens its foothold in the U.S. battery supply chain — a win-win for both partners.”
In a separate statement, GM and LG Energy Solution have announced a closer relationship, expanding their 14-year partnership to include the development of prismatic cell technology for future GM products. Ultium currently uses pouch-type cells, and GM says adding the rectangular cells in rigid enclosures to its repertoire will allow for space-efficient packaging that can reduce battery weight and costs. It’s part of what GM calls a “technology-agnostic approach to battery cells to optimize for range, performance, and charging speed.”
If anything, GM and LG are showing their flexibility not just in reacting to market changes, but also in forecasting their future product portfolio.
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