First GM Battery Pack Plant

General Motors unveiled plans to build a plant in Michigan with an investment of $43 million. The facility will manufacture lithium-ion battery packs for General Motors’ upcoming model Chevrolet Volt and other electric vehicles.

The plant in Michigan will be the first US battery pack plant to be operated by General Motors. The plant is scheduled to start production in the fourth quarter of 2009 with a capacity of 70,000 battery packs per annum. The facility will employ about 100 people.

The Volt is on track to become the first mass-market, plug-in hybrid in the US with its launch in November 2010. Unlike Toyota Motor Corp.'s (TM) Prius and other traditional hybrids, Volt is designed to run for 40 miles on a single battery charge, and can be recharged overnight at a standard electric outlet.

The carmaker expects to manufacture 10,000 Volt cars in its first 12 months of production, ultimately ramping up to 60,000 a year. South Korea’s LG Chem Ltd. will make battery cells for the Volt and would ship to the General Motors battery plant in Michigan.

General Motors has been trying to restore its product line since it emerged out of bankruptcy in July. Like peers, it is focusing on fuel-efficient vehicles. Recently, the government has provided the company with grants of $105 million under the $2.4 billion package to support the development of next-generation batteries and electric vehicles.

However, our concern is whether buyers will go for plug-in electric vehicles given the expensive lithium ions batteries used in these vehicles and the limited number of charging stations available.

Read the full analyst report on TM