The Opel parent company Stellantis is tightening its electrification course.

The world's fourth-largest car company in terms of sales is intensifying its existing cooperation with the South Korean battery manufacturer LG Energy Solutions.

Niklas Záboji

Business correspondent in Paris

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On Monday, both companies announced that they would sign a letter of intent to jointly build a factory for the production of battery cells and battery modules in North America.

To do this, they want to set up a joint venture.

The factory is to have a production capacity of 40 gigawatt hours. That corresponds roughly to what competitor Volkswagen is planning in Salzgitter - but is well below the targeted capacity of Tesla's Gigafactory in Grünheide. There is talk of 100 gigawatt hours and more. The start of construction for the Stellantis and LG Energy Solutions factory has been announced for the second quarter of 2022. It should go into operation at the end of 2024. The exact location has not yet been determined.

From Stellantis' point of view, the planned factory is an “important next step in the transformation of electrification in North America”.

In this region, the group aims to generate more than 40 percent of its sales with electric vehicles in 2030.

The batteries produced are to be delivered to the assembly plants in the USA, Canada and Mexico and used for the production of full-battery electric vehicles as well as plug-in hybrids.

"A monumental milestone"

Altogether, Stellantis wants to build up a battery production capacity of 260 gigawatt hours by 2030 - slightly more than the 240 gigawatt hours targeted by Volkswagen.

The group was created at the beginning of this year from the merger of Fiat Chrysler and the PSA Group, which includes brands such as Citroën, Peugeot and Opel.

"Today's announcement is further proof that we are implementing our aggressive roadmap for electrification," said Stellantis boss Carlos Tavares. They want to deliver electrified vehicles, "ignite the passion". However, investors did not share the enthusiasm. On the Paris stock exchange, the share price lost around 0.7 percent by noon on Monday. In addition, Stellantis is currently in a clinch with employee representatives at the German Opel locations after plans to outsource production plants became known.

For the electrification course, the Amsterdam-based company estimates investments of 30 billion euros by 2025 alone. In the course of this, Stellantis recently acquired a stake in the European battery cell manufacturer Automotive Cells Company. The Stuttgart competitor Mercedes-Benz and the French mineral oil company Totalenergies are also involved.

The Italian-American part of the Stellantis Group has a long-term partnership with LG Energy Solutions. An agreement for the delivery of lithium-ion battery pack systems was signed for the first time around seven years ago. They were used to produce the Chrysler Pacifica Hybrid. "Establishing a joint venture with Stellantis will be a monumental milestone in our longstanding partnership," said Jong-hyun Kim, President and CEO of LG Energy Solution.

The company, which is part of the LG Group, also supplies car manufacturers such as Tesla and, according to the latest reports, will go public this year.

That could bring in a low double-digit billion amount.

LG Energy Solution has its own production facilities in South Korea, the USA, Poland and China.

The company has a sales office in Sulzbach near Frankfurt.

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