In a significant shift for the automotive industry, General Motors (G.M.) announced on Monday that it will sell its stake in a nearly completed electric vehicle (EV) battery factory in Michigan to its partner, LG Energy Solution. This move reduces the number of battery plants G.M. operates in the United States to three, marking a pivotal moment in its strategy to dominate the EV market.

G.M. and the South Korean tech giant LG Energy Solution have already established successful joint operations at factories in Warren, Ohio, and Spring Hill, Tennessee, producing batteries that power popular models such as the Cadillac Lyriq and Chevrolet Equinox. However, G.M. has stressed its commitment to a separate joint venture with Samsung SDI, which is in the process of building a factory in New Carlisle, Indiana, ensuring they continue to expand their manufacturing capabilities.

Despite rapid growth in electric vehicle sales, the numbers have not met the ambitious projections that many automakers set a few years ago. This reality has prompted several car manufacturers to reassess their investments in EV production. “We believe we have the right cell and manufacturing capabilities in place to grow with the EV market in a capital-efficient manner,” says Paul Jacobson, G.M.’s Chief Financial Officer, reinforcing the company’s belief in its future in the EV space.

The Michigan plant—located in Lansing—will be completed by LG Energy Solution, with plans to sell its output to an undisclosed customer. G.M. anticipates recovering its substantial $1 billion investment in the nearly finished facility, allowing it to reallocate funds towards other crucial projects.

Interestingly, G.M. recently revealed it is on the cusp of achieving profitability with its electric vehicles, thanks in part to the domestic mass production of batteries, which significantly lowers costs. Moreover, they are poised to benefit from manufacturing subsidies from the Biden administration. In fact, during the third quarter, G.M. emerged as a leading seller of electric vehicles in the U.S., second only to Tesla, according to data from Cox Automotive.

However, the future could be uncertain. With President-elect Donald J. Trump and a Republican-led Congress potentially seeking to roll back or diminish those subsidies, automakers and battery producers are left to question the projected returns on their investments and growth strategies.

In a bid to innovate, G.M. has been reevaluating its battery approach, notably after hiring Kurt Kelty, a former Tesla executive, as vice president for batteries earlier this year. Kelty has expressed intentions to diversify G.M.'s battery offerings to better cater to various vehicle types and price points.

Furthermore, G.M. revealed on Monday its plans to collaborate with LG Energy Solution to develop prismatic batteries. These batteries, designed within rigid casings, promise lighter weight and simpler manufacturing processes compared to the current pouch batteries, which are softer and more flexible. This evolution in technology could lead to even more efficient production and potentially lower costs, positioning G.M. favorably as the demand for electric vehicles continues to surge.

As the EV battle heats up, G.M.'s decisions today could shape not just its future but the entire electric vehicle landscape moving forward. Stay tuned for further updates on this developing story!