LG to pay as much as $1.9 billion to GM over Bolt EV battery fires

A 2019 Chevrolet Bolt EV caught fire at a house in Cherokee County, Georgia, on September 13, 2021, according to local fire departments.

Cherokee County Fire Department

LG Electronics has agreed to make a refund General Motors Up to $ 1.9 billion for the recall of Chevrolet Bolt EVs due to fire risks from faulty batteries from the South Korean supplier.

Issues with the Bolt – the company’s flagship mainstream electric vehicle – have led the automaker to recall every electric car since production began in 2016. The repair of the vehicles, including the complete replacement of some batteries, is on expected to cost $ 2 billionsaid GM on Tuesday. That’s an increase from an earlier estimate of $ 1.8 billion.

The deal between the companies is a huge win for the automaker, who Wall Street missed expectations in the second quarter due to provision costs for the recall.

As a result of the agreement, GM will recognize an estimated recovery in the third quarter that will offset $ 1.9 billion of the $ 2.0 billion in costs related to the recalls.

The production problems occurred at LG Battery Solution’s plants in South Korea and Michigan. The “rare manufacturing defects” on the Bolt electric vehicles are a torn anode strip and a folded separator, which GM says increases the risk of fire when they are in the same battery cell.

“LG is a valued and respected supplier to GM and we are excited to enter into this agreement,” said Shilpan Amin, GM’s vice president of global purchasing and supply chain, in a statement. “Our development and manufacturing teams continue to work together to accelerate the production of new battery modules and we expect to start repairing customer vehicles this month.”

Ford, battery provider to spend $11.Four billion to construct new U.S. vegetation

DETROIT – Ford engine and battery supplier SK Innovation plan to invest more than $ 11.4 billion in new U.S. facilities that will create nearly 11,000 jobs for the production of electric vehicles and batteries.

Ford is building as part of a joint venture with the South Korean company SK. two lithium-ion battery plants in central Kentucky called BlueOvalSK as well as a huge 3,600-acre campus in west Tennessee, the automaker said Monday night. The campus will include another battery plant built with SK, along with a supplier park, recycling center and a new F-series electric truck assembly plant, Ford CEO Jim Farley told CNBC.

The plans are the latest from Ford to increase the development and production of electric vehicles – including batteries – under Farley, who started running the automaker this week a year ago. They also support President Joe Biden’s call to put onshore supply chains in the midst of a company global shortage of semiconductor chips that has turned several industries, including the automotive industry, on their heads.

A battery manufacturing complex that US automaker Ford Motor Co and its South Korean battery partner SK Innovation plan to build in Kentucky and open in 2025 can be seen in an artist version that was released on September 27, 2021.

Ford Motor Co | Handout | via Reuters

The investment is part of Farley’s “Ford +” turnaround plan to make the automaker’s traditional operations more profitable and better position it for emerging sectors such as autonomous, electric and connected vehicles.

“This is the new Ford,” Farley told CNBC during a telephone interview. “It’s time. We’re shoveling in the ground, 11,000 new workers. … It’s a tremendous commitment to build these digital products.”

Ford doesn’t expect to borrow additional debt to fund the plans, Farley said. He said the steps will be funded from the company’s profits.

Read more about electric vehicles from CNBC Pro

The new investment comes in addition to the $ 30 billion The company previously said it would go into electric vehicles by 2025, approximately $ 7 billion of which had already been invested before February.

Production at the plants, apart from one of the battery plants in Kentucky, is slated to begin in 2025, the company said. According to Ford, the second battery plant in Kentucky will go online in 2026.

“Decisive moment”

The “new Ford” is a drastic pivot from Farley’s predecessor Jim Hackett, who had previously told the automaker saw “no advantage” in the production of your own battery cells. It comes as Ford’s Crosstown rival General Motors Spends $ 4.6 billion through a joint venture with LG Chem for battery production from 2023.

Farley said the investment should be further evidence that Ford, believed by many on Wall Street to be lagging behind in electric vehicles, is positioned as the leader in the segment. “I don’t know of any other company that has made this announcement. Why would you ever think that we are behind? We’re up front, ”said Farley.

Ford’s shares have more than doubled since Farley became the automaker’s CEO almost a year ago.

Approximately $ 5.6 billion of Ford’s investment in SK will go to a new campus called Blue Oval City in Stanton, Tennessee, and $ 5.8 billion for the two factories in Glendale, Kentucky. Ford will cover approximately $ 7 billion of the $ 11.4 billion, according to Lisa Drake, Ford’s chief operating officer for North America.

“This is a really crucial moment for us and our country today,” Drake told reporters during a phone call. “We announce the largest single investment in new manufacturing facilities in Ford’s 118-year history.”

The three new plants for BlueOvalSK will give Ford 129 gigawatt hours of US production capacity per year – enough to power 1 million electric vehicles annually, Ford Icials said. That’s more than half of the EV production capacity Ford is expected to have worldwide by 2030.

“This is truly an overwhelming project that underscores Ford’s ambition for the fast growing US electric vehicle industry,” said Yoosuk Kim, global marketing director for SK Innovation, during a call.

New F series is coming

Ford expects the new vehicle manufacturing facility in Tennessee to be carbon neutral once fully operational, including zero-waste processes through to landfill.

Farley said the plant will build new F-series electric pickups. He added that, unlike the pickups, the next generation pickups will be designed solely as electric vehicles upcoming F-150 Lightning which is based on the traditional internal combustion engine pickup.

Ford has started pre-production of its F-150 Lightning electric pickup truck at a new facility in Dearborn, Michigan.

Michael Wayland | CNBC

“We will build an all-electric, bottom-up, optimized product platform at this facility. It will be the largest facility in our company’s history,” said Farley. “We’re going to be building a lot of fantastic F-Series electric vehicles there. We’re not going to say exactly what type it is.”

Farley said that with this announcement, the company is “reinventing what a pickup truck would be,” including the pallet. Drake said Ford expects a third of the full-size pickups sold in the US will be fully electric by 2030.

Ford’s current F-Series includes the F-150 and larger versions of the full-size truck, as well as medium-duty trucks and chassis for commercial buyers.

Farley and Drake compared the importance of the new EV plants to the mass production of the Model T by company founder Henry Ford, which made vehicles more affordable and accessible to the general public.

Ford previously said it expects at least 40% of its global sales will be electric vehicles by the end of this decade. The goal was announced before the Biden administration set a goal last month for half of all new car sales should be electric vehicles by 2030, including plug-in hybrid models

In addition to manufacturing facilities, Ford plans to invest $ 525 million over the next five years, including $ 90 million in a pilot program in Texas to train skilled technicians to service electric vehicles.

“This is just the beginning of our drive to lead America in sustainable transportation for the next century,” said Drake. “This investment propels us forward to lead the electric revolution.”

The Mustang Mach-E is Ford’s first new fully electric vehicle with a $ 11 billion investment plan in electrified vehicles by 2022.

Michael Wayland | CNBC

The cash is there, Volkswagen CEO says of deliberate battery cell push

Volkswagen Group Chief Executive Officer Herbert Diess gestures during a press conference in Barcelona, ​​Spain, 23 September 2020. REUTERS / Albert Gea / File Photo

MUNICH, September 7 (Reuters) – Volkswagen (VOWG_p.DE) is optimistic that there will be enough internal or external funding to push through its ambitious plan to build six large battery factories across Europe with partners by the end of the decade, the chairman said.

“The required capital is available on the market. Northvolt has shown that, ”said Herbert Diess on the sidelines of the IAA Munich.

Swedish battery cell maker Northvolt, in which Volkswagen has a 20% stake, raised $ 2.8 billion in June this year as part of one of the largest private placements in Europe, led by four Swedish pension funds and OMERS Capital Markets. Continue reading

“Today, the returns that can be achieved with battery production are high. It is a demand-driven market and will remain a demand-driven market for the foreseeable future, ”said Diess.

The construction of new battery cell plants, which usually cost around 2 billion euros each, is an essential prerequisite for Volkswagen’s vision of becoming a world leader in electric vehicles (EV).

Volkswagen outlined its battery cell push in March, which it intends to carry out with partners, but has not yet specified exactly how much it will cost and what proportion the automaker wants to finance itself.

The six European factories will have a combined production capacity of up to 240 gigawatt hours (GWh) per year, with the first 40 GWh coming from Northvolt from 2023.

The second plant will be built in the city of Salzgitter by 2025 in partnership with China’s high-tech Gotion (002074.SZ), in which Volkswagen has a 26% stake, with possible locations for a third and fourth plant in Spain and Eastern Europe.

Two more plants are to be built in the following years, but Volkswagen has not yet given any information about the location in Europe.

Diess said in May that parts of Volkswagen’s battery operations could be listed separately in an IPO. Continue reading

($ 1 = 0.8430 euros)

Writing by Christoph Steitz Editing by Madeline Chambers

Our standards: The Thomson Reuters Trust Principles.

GM CEO Mary Barra says firm is price extra conserving EV battery unit in home

General Motors unveiled its brand new Ultium modular platform and battery system on March 4, 2020 at its Tech Center campus in Warren, Michigan.

Photo by Steve Fecht for General Motors

General Motors CEO Maria Barra on Wednesday again pushed back the spin-off of the up-and-coming battery business for electric vehicles.

Remaining the unit with GM will add more value to the company than the spin-off, Barra said.

“An electric vehicle is all about the battery,” she told CNBC.Screeching in the street. “” I think we will accelerate that value creation if we keep this technology close and use the extensive battery know-how that General Motors has that we have. “

bar announced the company’s plans to sell its Ultium battery cells as well as its Hydrotech fuel cell technology to other companies. GM has signed a contract with Honda Motor for two electric cars. The company also announced this week that it had signed a letter of intent for GM to develop and supply its Ultium battery and Hydrotec systems for Wabtec freight locomotives.

CNBC’s Jim Cramer told Barra he believed the battery business may be worth more than the entire automaker, which currently has a market cap of nearly $ 90 billion. He asked why investors are not allowed to buy into the battery business.

GM does not currently produce its own battery cells for electric vehicles. It has announced plans to build four plants for such production, including two currently under construction in the USA through a joint venture with LG Chem until 2025.

Speculation and pressure from Wall Street about a possible spin-off of GM’s electric vehicle business have been rife for some time. Deutsche Bank has said that such a company is likely to be worth at least $ 15-20 billion and could potentially be worth up to $ 100 billion.

GM President Mark Reuss said in November The automaker analyzed the potential of a spin-off and determined that it would not be the right move for its business. He cited the cost of outsourcing as well as the benefits of having the EV operations part of the larger company.

electrical vehicles face rising battery lithium nickel cobalt prices

A GM employee poses with an example of the company’s next generation lithium metal batteries at the GM Chemical and Materials Systems Lab in Warren, Michigan on September 9, 2020.

Steve Fecht | General Motors | Handout | via Reuters

BEIJING – Growing demand for electric car batteries will drive up prices for key materials, Goldman Sachs analysts said in a March 18 release.

This, in turn, will increase battery prices by about 18%, which will affect the overall bottom line of electric car manufacturers, as the battery accounts for about 20% to 40% of vehicle costs, according to Goldman analysts.

While the report did not set specific price targets for the commodities, the analyst model forecast that a return to historical highs would more than double lithium costs for electric battery manufacturers. That of cobalt would also double, while the cost of nickel would increase by 60%.

A new type of battery

The limited availability of nickel, which is suitable for car batteries, could even accelerate the switch to a different type of battery called lithium iron phosphate (LFP), the report said. Tesla and Chinese start-up Xpeng are among the automakers already using this type of battery that doesn’t use nickel or cobalt but stores relatively less energy.

If nickel prices hit their all-time high of $ 50,000 per tonne, it could add $ 1,250 to $ 1,500 per electric vehicle, which could hurt consumer demand for cars, analysts said.

Ultimately, the growth of the electric car industry and the demand for battery materials depends on how many vehicles people buy. The tipping point for consumers to switch from gas-powered vehicles to electric cars is generally expected when battery costs are down enough.

That shift could take place in the next decade. Goldman predicts that battery costs will fall below internal combustion engines in 2030.