GM Said to Grant First Contract for Volt Batteries to LG Chem

By Jeff Green

Jan. 12 (Bloomberg) -- General Motors Corp., the biggest U.S. automaker, is poised to name a unit of South Korea’s LG Chem Ltd. the winner of the first battery contract for the Volt electric car, people familiar with the matter said.

The deal is part of an announcement today on electric- vehicle technology that includes GM’s plan to assemble battery packs at one of its factories, said the people, who asked not to be identified because the plans aren’t public yet.

Awarding the contract ends GM’s review of cells from LG Chem’s Compact Power Inc. subsidiary in Troy, Michigan, and a unit of Continental AG using technology developed by GM and A123Systems Inc. Batteries based on A123’s technology may be used in the future, the people said.

The move is a step toward the November 2010 start of sales for the Volt, which GM is counting on to close a technology gap with Toyota Motor Corp., the world’s biggest seller of hybrids. Toyota is working on a plug-in version of its Prius to match the Volt’s projected 40 miles of travel on one battery charge.

Today’s announcement will cover Detroit-based GM’s plan to assemble cells provided by LG Chem into the final battery pack, and may include details of the automaker’s investment in the project, the people said. The New York Times reported the battery-pack assembly plans yesterday.

‘Battery Partner’

“We will announce a battery partner,” GM Vice Chairman Bob Lutz said in an interview yesterday at the North American International Auto Show in Detroit, declining to identify the winner. Chief Executive Officer Rick Wagoner also said the automaker would talk more about its technology effort, declining to give details.

LG Chem, South Korea’s biggest chemical maker, said Jan. 8 that the company was still in talks to supply hybrid-auto batteries to GM. CEO Kim Bahn Suk said at the time that LG Chem expected a “positive result” from the discussions.

The four-passenger Volt will use its internal-combustion engine only to recharge the battery. The car can be plugged into a standard 120-volt outlet and be charged in about eight hours, or less than 3 hours at a 240-volt outlet, GM said.

GM, like all automakers selling in the U.S., must increase the average fuel efficiency of the fleet as much as 40 percent to 35 miles per gallon of gasoline by 2020 to comply with new federal standards.

A123Systems, a General Electric Co.-backed maker of lithium-ion batteries that is based in Watertown, Massachusetts, said last week it is applying for $1.84 billion in federal loans to build the first large U.S. plants to supply rechargeable hybrids and electric cars.

Closely held A123, which last year announced an initial public share sale, said in a statement its first U.S. battery plant would be in southeast Michigan. The company plans to eventually spend $2.3 billion on U.S. factories that would employ 14,000 people.

To contact the reporter on this story: Jeff Green in Detroit at jgreen16@bloomberg.net