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General Motors (GM) Inks a $19B Deal for EV Battery Materials
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In a move aimed at fortifying the electric vehicle (EV) market, U.S. auto giant General Motors (GM - Free Report) and South Korean battery supplier LG Chem inked a monumental $19 billion deal. The agreement, spanning roughly the next decade, is set to redefine the landscape of EV production and marks one of the largest supply contracts in GM's history.
The deal outlines LG Chem's commitment to supplying GM with more than 500,000 tons of crucial cathode materials between 2026 and 2035. These materials, including nickel, cobalt, manganese and aluminum, are vital components for EV batteries, powering vehicles with a range exceeding 300 miles. Notably, this supply is projected to fuel approximately five million EVs, underlining GM's ambitious EV production targets.
The cathode materials will be sourced from LG Chem's state-of-the-art plant, which is currently under construction in Tennessee. This strategic location aligns with GM's joint venture battery cell plants across North America, including Ultium Cells LLC, an entity formed in collaboration with LG Energy Solution. By strengthening the regional supply chain, the partnership aims to bolster EV production in North America, catering to the burgeoning market demand.
Jeff Morrison, GM's vice president of Global Purchasing and Supply Chain, emphasized the significance of this contract in reinforcing GM's commitment to building a robust and sustainable EV supply chain. He highlighted the pivotal role of the agreement in supporting GM's rapidly expanding EV production requirements. Additionally, Morrison stressed the importance of localizing production in Tennessee, thereby enhancing the resilience of the North American supply chain.
LG Chem's CEO, Shin Hak-cheol, echoed Morrison's sentiments, emphasizing the strategic cooperation between the two companies in spearheading the North American EV market toward a sustainable future. He underscored the shared goal of delivering unique customer value through enhanced productivity and the expansion of global production capacities.
This groundbreaking deal builds upon the foundation laid by GM and LG Chem's initial agreement in 2022, wherein LG Chem committed to supplying GM with 968,000 tons of cathode active material through 2030. The extension of the partnership underscores GM's enduring commitment to EVs despite the industry's slower-than-anticipated adoption rate. It signifies a strategic pivot toward long-term planning, adapting to evolving market dynamics while reaffirming GM's position as a frontrunner in the EV revolution.
Moreover, the agreement holds broader implications for the EV market, signaling a paradigm shift toward sustainable transportation solutions. As governments worldwide ramp up efforts to combat climate change, the electrification of transportation emerges as a critical strategy. GM's substantial investment in EV battery materials underscores its dedication to driving this transformation forward, setting a precedent for other auto giants to follow suit.
With a focus on sustainability, innovation, and strategic collaboration, the partnership sets the stage for accelerated growth and technological advancement in electric mobility. As GM and LG Chem pave the way for a greener automotive future, the ripples of their collaboration are poised to reshape the automotive landscape for years to come.
Zacks Rank & Key Picks
General Motors currently carries a Zacks Rank #3 (Hold).
The Zacks Consensus Estimate for GT’s 2024 sales and earnings suggests year-over-year growth of 2.7% and 2,152.6%, respectively. The EPS estimate for 2024 has improved by 15 cents in the past 30 days. Goodyear has a Value Score of A.
The Zacks Consensus Estimate for PCAR’s 2024 and 2025 EPS has improved by 51 cents and 34 cents, respectively, in the past 30 days. The company surpassed earnings estimates in the trailing four quarters, the average surprise being 17.1%. PACCAR has a Value Score of A.
The Zacks Consensus Estimate for OSK’s 2024 sales and earnings suggests year-over-year growth of 6.7% and 4%, respectively. The consensus estimate for 2024 EPS has improved by 8 cents in the past seven days. Oshkosh has a Value Score of A.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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General Motors (GM) Inks a $19B Deal for EV Battery Materials
In a move aimed at fortifying the electric vehicle (EV) market, U.S. auto giant General Motors (GM - Free Report) and South Korean battery supplier LG Chem inked a monumental $19 billion deal. The agreement, spanning roughly the next decade, is set to redefine the landscape of EV production and marks one of the largest supply contracts in GM's history.
The deal outlines LG Chem's commitment to supplying GM with more than 500,000 tons of crucial cathode materials between 2026 and 2035. These materials, including nickel, cobalt, manganese and aluminum, are vital components for EV batteries, powering vehicles with a range exceeding 300 miles. Notably, this supply is projected to fuel approximately five million EVs, underlining GM's ambitious EV production targets.
The cathode materials will be sourced from LG Chem's state-of-the-art plant, which is currently under construction in Tennessee. This strategic location aligns with GM's joint venture battery cell plants across North America, including Ultium Cells LLC, an entity formed in collaboration with LG Energy Solution. By strengthening the regional supply chain, the partnership aims to bolster EV production in North America, catering to the burgeoning market demand.
Jeff Morrison, GM's vice president of Global Purchasing and Supply Chain, emphasized the significance of this contract in reinforcing GM's commitment to building a robust and sustainable EV supply chain. He highlighted the pivotal role of the agreement in supporting GM's rapidly expanding EV production requirements. Additionally, Morrison stressed the importance of localizing production in Tennessee, thereby enhancing the resilience of the North American supply chain.
LG Chem's CEO, Shin Hak-cheol, echoed Morrison's sentiments, emphasizing the strategic cooperation between the two companies in spearheading the North American EV market toward a sustainable future. He underscored the shared goal of delivering unique customer value through enhanced productivity and the expansion of global production capacities.
This groundbreaking deal builds upon the foundation laid by GM and LG Chem's initial agreement in 2022, wherein LG Chem committed to supplying GM with 968,000 tons of cathode active material through 2030. The extension of the partnership underscores GM's enduring commitment to EVs despite the industry's slower-than-anticipated adoption rate. It signifies a strategic pivot toward long-term planning, adapting to evolving market dynamics while reaffirming GM's position as a frontrunner in the EV revolution.
Moreover, the agreement holds broader implications for the EV market, signaling a paradigm shift toward sustainable transportation solutions. As governments worldwide ramp up efforts to combat climate change, the electrification of transportation emerges as a critical strategy. GM's substantial investment in EV battery materials underscores its dedication to driving this transformation forward, setting a precedent for other auto giants to follow suit.
With a focus on sustainability, innovation, and strategic collaboration, the partnership sets the stage for accelerated growth and technological advancement in electric mobility. As GM and LG Chem pave the way for a greener automotive future, the ripples of their collaboration are poised to reshape the automotive landscape for years to come.
Zacks Rank & Key Picks
General Motors currently carries a Zacks Rank #3 (Hold).
Some top-ranked players in the auto industry are Goodyear Tire (GT - Free Report) , PACCAR (PCAR - Free Report) and Oshkosh Corporation (OSK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GT’s 2024 sales and earnings suggests year-over-year growth of 2.7% and 2,152.6%, respectively. The EPS estimate for 2024 has improved by 15 cents in the past 30 days. Goodyear has a Value Score of A.
The Zacks Consensus Estimate for PCAR’s 2024 and 2025 EPS has improved by 51 cents and 34 cents, respectively, in the past 30 days. The company surpassed earnings estimates in the trailing four quarters, the average surprise being 17.1%. PACCAR has a Value Score of A.
The Zacks Consensus Estimate for OSK’s 2024 sales and earnings suggests year-over-year growth of 6.7% and 4%, respectively. The consensus estimate for 2024 EPS has improved by 8 cents in the past seven days. Oshkosh has a Value Score of A.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.