On January 25, General Motors CEO Mary Barra announced an investment of more than $7 billion in four Michigan manufacturing sites. The investments will include $2.6 billion for a new battery plant through a joint venture with LG Energy Solutions and $4 billion to convert its Orion Assembly plant in suburban Detroit to produce electric pickup trucks. The truck plant and the new 2.8 million-square-foot battery plant are expected to begin production in 2024. “We will have the products, the battery-cell capacity and the vehicle-assembly capacity to be the EV leader by mid-decade,” the CEO said in a statement. But whether the U.S. automaker will have the commodity materials needed to produce the batteries at Orion and how much those materials will cost are now in question.
Battery-cell production is a crucial piece of the supply chain for electric vehicles, and while automakers other than Tesla have largely outsourced their production to third-party suppliers, several are now scrambling to wrest control over that production as well as access to the raw material needed for the batteries. Yet for the key component of today’s preferred battery, lithium, surging demand and concerns over environmental degradation have resulted in skyrocketing prices and lower margins for batteries and auto manufacturers. As governments, companies and investors rush toward an all-electric transportation future, the economics of battery production will be a bumpier road than at first blush. But environmental, supply and cost restraints must eventually be overcome in order to make EVs affordable and profitable.