Exclusive: Samsung SDI’s $3.5B joint battery project with GM ‘paused’ amid EV slowdown

This article is by Sarah Chea and read by an artificial voice. A $3.5 billion battery project led by a joint venture between Samsung SDI and General Motors (GM) in New Carlisle, Indiana, has been put on hold, as the U.S. automaker recalibrates its EV strategy amid moderating demand. "The project is being paused," a spokesperson for the Indiana Economic Development Corporation told the Korea JoongAng Daily recently. The agency, chaired by Indiana Gov. Mike Braun, handles investments in the state. The suspension will inevitably delay the project's original timeline, which called for mass production to begin in the fall of 2027 with an annual capacity of up to 36 gigawatt hours, enough to make around 300,000 EVs. Several options are reported to be under discussion, including a potential shift in battery chemistry to lithium iron phosphate units preferred by automakers, as well as GM's potential withdrawal from the joint venture, similar to its decision last year regarding a third battery plant in Michigan in a 50:50 project with LG Energy Solution called Ultium Cells. On the matter, Samsung SDI commented that it and GM "continue to work together and will discuss future plans." Whether the project moves forward will depend largely on how strongly EV demand recovers. A prolonged Iran war that drives oil prices higher could make that scenario more likely. The uncertainty comes as GM undertakes a sweeping reassessment of its EV capacity and manufacturing footprint, seeking to align its operations with softer-than-expected consumer demand on the back of rolled-back U.S. EV incentives. The Detroit-based automaker reflected a total of $7.6 billion in expenses related to production cutbacks across its EV and battery operations last year alone, including a substantial fourth-quarter write-down. Of them, around $400 million in third quarter charges tied to "contract cancellation fees and commercial settlements associated with EV-related investments," followed by an additional $4.2 billion in fourth quarter charges stemming from "supplier commercial settlements, contract cancellation fees and other charges," according to regulatory filings with the U.S. Securities and Exchange Commission. In fact, GM last year sold its entire stake in Ultium Cells' third Michigan plant to LG Energy Solution for $2.14 billion. The venture, established in 2020, runs two plants in Ohio and Tennessee that have also been shut down since the beginning of the year due to weak battery sales. LG Energy plans to independently operate the Michigan facility, producing batteries for energy storage systems (ESS) as well as EV batteries destined for Toyota Motor. Global automakers are increasingly pulling back from battery joint ventures with Korean firms, in a bid to regain flexibility over production planning and capital deployment. Stellantis has already stepped back from a plan to build a battery plant in Canada with LG Energy Solution by selling its 49 percent stake for just $100, despite already racking up $980 million in investment in the project. LG Energy intends to convert the facility into a production site for ESS batteries. The outlook for the $3.2 billion No. 2 battery plant by Stellantis and Samsung SDI also remains uncertain, after Bloomberg reported that the automaker is seeking to exit the venture. "Automakers are bound by joint ventures to take offtake volumes, and when those volumes fall short, they are left with the burden of sharing the resulting losses," said Lee Ho-geun, an automotive engineering professor at Daeduk University. "To regain flexibility, they are willing to absorb near-term financial pain to unwind these structures." "From an automaker's perspective, withdrawing from joint ventures and shifting to short-term supplier contracts is a more effective approach." Ford had plans to operate three battery plants in partnership with SK On — two in Kentucky and one in Tennessee — under a joint venture, BlueOval SK. However, the two compani...