Stellantis N.V. STLA and LG Energy Solution have entered into a memorandum of understanding to jointly produce battery cells and modules for North America.
Per the deal, both companies together will build a new factory having an annual capacity of 40 gigawatt-hours that will be functional by the first quarter of 2024. The astounding capacity build-up puts it on par with the massive Panasonic-Tesla gigafactory in Sparks, NV.
Stellantis will get a supply of the batteries produced at the factory and use them in the production of plug-in hybrids to full battery electric vehicles at its assembly plants in the United States, Canada, and Mexico.
The transaction is awaiting regulatory approvals and is subject to agreement on definitive documentation and customary closing conditions. However, neither the associated cost nor the location of the factory has yet been disclosed. The companies have been working together since 2014 when Stellantis (then Fiat Chrysler Automobiles) was supplied lithium-ion battery pack system and controls by LG Energy Solution for the Chrysler Pacifica Hybrid. The new venture aims to further strengthen the partnership.
Stellantis plans to invest more than €30 billion throughout 2025 in electrification and software development so that it can offer EV options for every model that it produces in the United States. The joint venture forms part of this plan. It targets generating 40% of its sales through EVs by 2030.
Stellantis stated that the gigafactory will help it to achieve 260 gigawatt-hours of capacity by 2030 and is proof of its aggressive electrification drive.
LG Energy is equally enthusiastic about the deal and believes that it can gradually emerge as an important provider of battery solutions to its prospective customers in the region.
Shares of Stellantis have climbed 88.5% over a year, outperforming the industry’s 85.7% rise
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Stellantis — which shares space with auto giants like General Motors GM, Ford F, and Volkswagen VWAGY — currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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