General Motors Co. (NYSE: GM) is working to secure its position as an electric vehicle leader with a new battery factory project in Ohio.
The company, which is the seventh-largest manufacturer in the world by revenue, will partner with South Korea’s LG Chem to develop the joint venture.
The plant will receive an investment of up to $2.3 billion and will create 1,100 new jobs in the automotive industry.
Construction to Begin Next Year
General Motors and LG Chem will split the investment evenly, with groundbreaking expected by the second half of 2020. The factory will be located near Lordstown, Ohio, where GM previously operated a car-assembly plant with 4,500 workers. The new factory should help to reinvigorate the local economy while leveraging the talent of experienced automotive workers who still reside in the region.
When announcing the new factory, GM CEO Mary Barra said that “With this investment, Ohio and its highly capable workforce will play a key role in our journey toward a world with zero emissions. Combining our manufacturing expertise with LG Chem’s leading battery-cell technology will help accelerate our pursuit of an all-electric future.”
General Motorsis already one of America’s largest electric vehicle producers. It currently offers the Chevrolet Volt, a plug-in hybrid, as well as the all-electric Chevrolet Bolt. Only Tesla and Toyota sell more electric vehicles in the U.S.
New Factory Will Establish General Motors as an Electric Vehicle Leader
This significant investment is part of a long-term strategy designed to turn GM into an electric vehicle leader. Tesla has dominated the market in the United States. GM plans to use its new battery factory to support a lineup of 20 electric vehicles by 2023.
Electric vehicles make up just 1.5% of new vehicle sales in the U.S. today. Analysts expect that the figure will increase to 7.5% by 2030. The new factory will make General Motors the only other automaker besides Tesla with an in-house battery manufacturing facility in the United States.
Investors Should See Potential in This Development
General Motors has vastly underperformed the stock market this year, with just 5.56% growth in share price. As a long term pick, the stock now looks more promising. GM already has extensive manufacturing and assembly plant facilities for its vehicles. With a new battery plant, it will be able to produce for the local market without having to rely on external suppliers.
As an investment, GM’s relatively low price makes it interesting. It also comes with a 4.30% dividend yield, making it compelling for long-term investors focused on retirement and wealth generation.
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