Stellantis consolidates its partnership with the Korean Lg Energy Solution and proceeds in the unstoppable march towards electrification. The two companies have signed a memorandum of understanding for the creation of a joint venture aimed at the production of cells and battery modules for North America. In its electrification strategy presentation last July, the company announced it would find a partner for North America. In practice, a new battery production plant will be created which will help bring the sales of electrified vehicles of the group born from the merger of FCA and PSA to more than 40% of the total in the United States by 2030. Details on the non-investment have been provided, but according to an analyst it can amount to between 2 and 2.8 billion euros.
The location of the new facility, which will have an annual capacity of 40 gigawatt hours, is currently being analyzed and further details will be shared later. The foundation stone is planned for the second quarter of 2022, while the production will start by the first quarter of 2024. The batteries produced in the new plant will be supplied to the Stellantis assembly plants in the United States, Canada and Mexico for installation on next generation electric vehicles, ranging from plug-in hybrids to full electric battery-powered vehicles, sold as part of the Stellantis brand portfolio.
“Today’s announcement is a further demonstration of the fact that we are implementing our unstoppable roadmap towards electrification and are following up on the commitments made at the EV Day event in July”, commented the CEO of Stellantis, Carlos Tavares, specifying that with this initiative “we have defined the next gigafactory of the Stellantis portfolio that will help us reach, at least, a total of 260 gigawatt hours of capacity by 2030”.
Together, Tavares added, “we will lead the industry with levels of efficiency that will be benchmarks for the sector and we will offer electrified vehicles that will thrill.” Creating a joint venture with Stellantis, also pointed out Jong-hyun Kim, president and CEO of LG Energy Solution, “will be a historic chapter in our long-standing partnership. Utilizing our collective and individual technical skills and mass production capability. , LGES will position itself as a provider of battery solutions to potential customers in the region. ”
The partnership between the two companies in the electrified vehicle sector dates back to 2014, when Lg Energy Solution (then LG Chem) was selected by Stellantis (then Fiat Chrysler Automobiles) to supply the lithium-ion battery system and controls for Chrysler. Pacifica Hybrid, the industry’s first electrified minivan. Stellantis plans to invest over 30 billion euros by 2025 in electrification and software development and aims to maintain 30% more efficiency than the industry average in the ratio of total R&D and capital expenditure to revenues. .
Although the analysts of Intesa Sanpaolo (rating buy and target price at € 24.6) are not particularly surprised by the announcement, they consider the signing of the joint venture with Lg Energy Solution in North America as particularly positive and as a further step forward in the process. of electrification of Stellantis. “The group’s moves in North America go hand in hand with Stellantis’ EV strategy in Europe, where the group already has a joint venture with Total and Saft for the production of cells and modules and where Stellantis launches the new gigafactory in Termoli “, they told Intesa Sanpaolo, recalling that, by 2030, the group’s target is to reach 70% of the LEV mix (from the current 14%) in Europe, 10% above the current assumptions on the mix of LEV expected on the market, according to management.
Also for Bestinver Securities (rating buy and target price under review) the news is positive for Stellantis as the gigafactory that will be built together with Lg Energy Solution will represent about 15% of the battery production capacity that the group intends to build by 2030 and approximately 45% of the expected capacity for North America. Bestinver recalled that the group’s battery supply strategy is to ensure more than 130GWh of capacity by 2025 (over 80GWh in Europe and over 50GWh in North America) and, in fact, more than 260GWh by 2030 (over 170GWh in Europe and over 90GWh in North America), with a total of five gigafactories (France, Germany, Italy and two in North America), completed with additional supply and partnership contracts to support total demand.
Meanwhile, a Michigan judge dismissed General Motors’ lawsuit filed against FCA, now Stellantis, in November 2019 involving bribery of members of the United Auto Workers (UAW) union. GM had sued FCA, claiming it had bribed UAW union officials for many years to condition the bargaining process and gain advantages, causing billion-dollar damage to the American auto maker.
David Allen, a Wayne County Circuit judge, dismissed GM’s lawsuit in the state court last Friday, which also cited two former FCA executives who pleaded guilty in a previous Department of Justice corruption investigation. The judge said General Motors “did not adequately prove that FCA caused actual, legally recognizable damage through the group’s corruption scheme.”
Stellantis spokesperson Shawn Morgan commented, “As we have stated from the moment it was filed, the case is without merit. The court agreed once again and rejected it.” A GM spokesperson replied: “We respectfully disagree with the ruling and consider our legal options.” In July 2020, the district judge dismissed the federal suit; the appeal is pending. “For this matter in our evaluation we have never taken into consideration the risk of latent liabilities”, said Equita Sim (rating buy and target price at 22.6 euros). The positive outcome of the lawsuit for the Stellantis group is in line with analysts’ expectations and the stock on Piazza Affari fell by 0.23% to € 17.16. In any case,
The investment bank thus confirmed the buy rating and the target price of 22 euros on the share, also because last Friday the Council of Ministers of the Draghi government approved further eco-car incentives for the final part of the year for an amount equal to 100 million, lower than the 300 million assumed in the previous days. As in the past, the additional allocation is divided according to the level of CO2 emissions with the most conspicuous part in favor of cars with emissions between 0 and 60 g / km
The government initiative comes at a time of great need for the sector as the funds allocated with the 2019 budget law, as well as the additional dowry at the beginning of September, ended at the end of September. For this reason and given the distribution of incentives, these can help the demand for low-emission vehicles even if the final effect remains to be assessed in the context of a production significantly impacted by the lack of chips. Italy represents approximately 9% of the volumes of Stellantis. (All rights reserved)
