$General Motors (GM.US)$ An important decision has been announced to sell shares of its electric vehicle battery factory Ultium Cells LLC in Lansing, Michigan to the South Korean partner LG Energy, with an expected recovery of about 1 billion dollars in investment. Although the factory will continue to supply batteries for General Motors' electric vehicles, this move reflects General Motors' prudent assessment of the current electric vehicle market supply and demand and future uncertainties. Additionally, both parties plan to jointly develop square batteries to further enhance efficiency and reduce costs.

General Motors disclosed the deal on Monday, stating that the battery plants in Ohio and Tennessee, along with part of the capacity of the new Lansing plant, are sufficient to support the short-term demand for its electric vehicles. Despite the continued growth in electric vehicle sales, a slowdown in demand and political uncertainty surrounding federal electric vehicle tax credits have made the future prospects of all-electric vehicles unclear. The transaction is expected to be completed in the first quarter of next year.

It is worth mentioning that General Motors and LG Energy still jointly hold a 50% stake in Ultium, which operates two battery plants located in Ohio and Tennessee, with the Lansing plant nearing completion. After the transaction is completed, LG Energy will be able to independently sell the batteries produced at the Lansing plant, not only to General Motors but also to other auto manufacturers.

General Motors Executive Vice President and chief financial officer Paul Jacobson stated that this transaction will allow General Motors to sync with the electric vehicle market in a capital-efficient manner while helping LG Energy utilize the new capacity to meet market demand.

In addition, General Motors and LG Energy also plan to jointly develop square batteries to replace the soft-pack batteries currently produced by Ultium. The square batteries, due to their rectangular design, can be packaged more efficiently, reducing weight and costs while simplifying the manufacturing process. This transition is led by former executive Kurt Kelty, who is guiding General Motors in exploring different battery chemical compositions and shapes to find the best solution for each vehicle model.$Tesla (TSLA.US)$He is leading General Motors in researching different battery chemical components and shapes to find the most suitable solutions for each model.

Given that General Motors currently has nearly 12 models for sale, the company has the opportunity to deeply explore cost reduction and efficiency improvement in battery manufacturing. Kelty pointed out that by adopting square battery designs, General Motors can more efficiently integrate more battery cells, thereby maximizing the vehicle's energy storage capacity without adding additional costs and weight.

It is worth mentioning that general motors has been in discussions with japan's TDK corp. to plan the production of batteries using lithium iron phosphate (LFP) technology at a factory in the usa. This technology is obtained from china.$Contemporary Amperex Technology (300750.SZ)$Lithium iron phosphate batteries are lower in cost compared to nickel-rich lithium-ion batteries, but they store less energy.

The Chevrolet Bolt EV will adopt lithium iron phosphate batteries when it goes into production next year, but these batteries will not come from the joint venture with TDK.

Editor/Danial