GM, LG partnership on Chevy Bolt may be roadmap for future deals

Reuters News
Posted: Oct 20, 2015 11:34 AM

By Paul Lienert

DETROIT (Reuters) - General Motors Co on Tuesday outlined a wide-ranging partnership with Korean electronics firm LG Corp for production of the 2017 Chevrolet Bolt electric car that could establish a blueprint for such collaborations in the future.

Several LG subsidiaries, including LG Electronics and LG Chem, have worked closely with GM to develop electric motors, battery cells, dashboard displays and other electronic systems for the Bolt, which goes into production late next year in Michigan.

The two companies are highlighting their partnership at a time when GM is under pressure from Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne to explore an alliance to spread the costs of developing electric vehicles and other new technology. GM Chief Executive Officer Mary Barra has rebuffed Fiat Chrysler, saying GM can improve economies of scale and advance new technology strategies in other ways.

The GM-LG partnership is one of the most extensive yet between a U.S. automaker and an overseas supplier, and will shift more of the development and production cost for the new Chevrolet to a partner with considerable technical expertise.

The Bolt is designed to be an affordable electric car, priced from around $35,000, with a 200-mile range between charges. The vehicle would compete against BMW AG's i3, the Nissan Leaf and Tesla Motors Inc's future Model 3.

LG's initial engagement with GM began in 2007, when LG Electronics provided the vehicle communications module for GM's OnStar telematics system. LG Chem supplied battery cells for the Chevrolet Volt, a plug-in hybrid launched in 2010.

With the Bolt, GM was able to shift some costs to LG, a consumer electronics company that has been building its connections in the auto industry.

LG invested more than $250 million in an engineering and manufacturing facility in Incheon, outside Seoul, to develop and build components and systems for the Bolt, according to a source familiar with the deal.

Our Rules Of The Game: US Constitution
Walter E. Williams

The supply agreement is a coup for LG Electronics, which is trying to boost its auto business amid growing headwinds for its television and smartphone businesses. The broad range of products being supplied to GM could enhance LG Electronics' auto business, which recently won contracts to supply information displays to Honda Motor Co and Volkswagen AG's <VOWG_p.DE> Porsche.

The evolving auto/tech partnerships could cut both ways. Apple Inc has talked with German automaker BMW AG about collaborating on an Apple-designed electric car, and Google said it is talking to vehicle manufacturers about partnering on a self-driving car.

(editing by Joseph White in Detroit; Editing by David Gregorio)