General Motors forms a $2B joint venture with LG to build electric car batteries
Power Couple... General Motors' new partnership with LG isn't about sticking LG phones into GM sedans. We're talking batteries. The South Korean tech icon makes batteries too, and GM needs hundreds of thousands of them for its electric car fleet. This partnership is a win for the Midwest:
- Lordstown, OH: GM and LG will invest $1B each into a new battery factory that'll employ 1,100 workers.
- Detroit, MI: GM is building its electric pickup there (Silverado and/or Sierra), and their batteries will come straight outta the Buckeye state.
Batteries are what make electric cars expensive... Without gas, the horses need to be powered by batteries. Big ones. Thousands of times bigger than the battery in your iPhone. The price of those batteries is the main reason electric cars are about 50% more expensive than gas ones.
- In 2010, electric cars were so new that an average battery cost $110K.
- Today, the price of batteries for electric vehicles has come way down, but is still $15K (and still the most expensive part of the car, by far).
- GM wants to lock down its own battery source for the 20 electric cars it plans to introduce by 2023.
Joint ventures are like workout buddies... They help you train better, keep you accountable, and push you to lift more (always have a spotter). GM brings the car expertise while LG owns the battery mastery — together, they each own 50% of the new company. JVs can help do more at lower costs, but only if the 2 companies overcome trust issues:
- You lose control within a JV - both companies own half the new one, so decisions gotta be made (peacefully) together.
- You need trust with your JV partner — you're now sharing biz secrets.