If built here, General Motors’ newly announced joint venture to build a factory to produce cathode active material — at an unspecified North American location — would fill a critical missing link in Canada’s EV battery supply chain. It could also make sense for GM
General Motors is continuing to send strong signals that it’s not only going to participate in a transition to a North American electric vehicle future, but it’s going to lead it.
Less certain, at this point, is if this next step might directly involve Canada.
On Dec. 1, GM announced it is entering into a non-binding joint venture with South Korean battery material company, Posco Chemical, to bring a cathode active manufacturing (CAM) factory to North America to start production by 2024, in support of its Ultium battery operations. A definitive agreement is expected in the near future, says the company, with the move solidifying the legacy automaker’s North American EV battery and vehicle supply chain.
“Our work with Posco Chemical is a key part of our strategy to rapidly scale U.S. EV production and drive innovation in battery performance, quality and cost,” said Doug Parks, GM executive vice-president of global product development, purchasing and supply chain in company release materials. “We are building a sustainable and resilient North America-focused supply chain for EVs covering the entire ecosystem from raw materials to battery cell manufacturing and recycling.”
First of many
GM’s is the first large North American OEM announcement about establishing a cathode active material plant to supply the rest of its supply chain in Canada and the United States. It’s likely the first stone of an avalanche of CAM announcements say industry pundits, but taking the first step puts GM ahead of its competitors in the race to establish a vertically integrated EV battery supply chain.
The other notable aspect of the announcement is that while all four of GM’s Ultium battery factories are being built or planned for U.S. locations, the release only said somewhere in North America.
Electric Autonomy Canada reached out to GM Canada to ask if a Canadian location is in the running, but a company spokesperson declined to comment.
However, Canadian government officials are known to be touting this country as an appealing location to establish a cathode factory — particularly in Ontario or Quebec — and coupled with GM’s ongoing strategic investments in Canada it could spell out a major opportunity.
Cathodes are Canada’s “missing link”
“The Canadian existing automotive industry is at risk by the move to electric vehicles, unless it can secure more investment to produce electric vehicles in Canada,” says Andrew Leyland, head of strategic advisory at Benchmark Minerals in an interview with Electric Autonomy.
“Cathode and anode are the missing link between having domestic raw materials and having the vehicle production.”
It’s against this backdrop that Canada is going head-to-head with competing jurisdictions in the U.S. to persuade OEMs and industry adjacent business to put down roots in the country. Unfortunately, Canada’s late start to break into the battery production market is not going to benefit it in the race to attract and secure EV-related investments — despite substantial mining operations coast-to-coast-to-coast and Ontario’s retooled-for-electric automotive industry.
“It would be great if this went to Ontario, but you know, there’ll be a lot of competition from U.S. states, both in the Midwest and also in the south,” says Leyland.
“It’s a bit of a beauty parade at the moment of all of these politicians trying to attract these industries and trying to get the best subsidies out there.”
The top American states competing with Canada for factories are Tennessee, Illinois, Ohio, Michigan, Georgia and New York. Already GM has invested in Canada for its battery R&D, yet ultimately chose American locations for its upcoming Ultium battery cell factories. The first two, in partnership with LG Chem, are being built in Lordstown, Ohio and Spring Hill, Tenn. Specific U.S. sites for the other two haven’t been announced.
Lending credence to the possibility that GM might yet choose Canada for its cathode factory were comments from GM Canada president Scott Bell in a recent exclusive interview with Electric Autonomy. In that conversation, Bell said the company sees Canada as “playing a big role” already, and that there are “some opportunities” with regards to the materials need to make batteries, specifically.
Among those materials needed to make batteries are cathodes.
Why Canada for GM’s cathodes?
Cathode active material production is the most energy intensive part of the battery process. It requires, ideally, being located to cheap and renewable power sources, located in close proximity to the location of refined raw materials and with reasonable access to downstream battery cell production.
The CAM process involves taking refined battery minerals, combining them and turning them into a liquid slurry, which is then shipped in barrels or bags to battery cell manufacturing plants for processing into cells, battery packs and, ultimately, put into vehicles.
If the EV battery supply chain is shaped like an hourglass, with mining and raw materials the top bulb and battery and automotive making the bottom globe, CAM (and anode) production occurs at the neck between the two.
It’s at this point — once the CAM slurry is made — that battery material becomes the easiest to transport between locations. In addition, CAM is not tariffed under USMCA, nor is CAM targeted by President Biden’s proposed Build Back Better bill.
With all these criteria needing to be met it’s easy to see how Canada is sitting at an advantage to attract a CAM factory. Both Quebec and Ontario have some of the cleanest electric grids in Canada, providing carbon tax benefits, with Quebec coming out ahead of all other provinces in terms of affordability of power. Ontario and Quebec have the mining industries for the raw materials and are looking to build out battery industrial parks within the provinces. Ontario has a more robust automotive industry, while Quebec was chosen for two battery cell manufacturing plants earlier this year.
Where Canada stumbles and is out-muscled by the United States is in government financial support for companies, like GM, looking to set up factories. But with the clear logistical, operational and carbon credit benefits Canada offers, a decision may come down to more than subsidies.
A cathode factory specs
Today there are roughly 106 CAM producers worldwide. Only nine of them — not including a potential GM cathode plant in Canada or the U.S. — are outside of China, South Korea and Japan, says Leyland.
In all likelihood, he believes, an increasing number of CAM factories will be established in North America in the next decade.
At roughly US$300-$400 million cost per factory and a market demand for roughly half a million tonnes of CAM in North America by 2030 (currently, North America only produces 4,000 tonnes), according to Benchmark’s research, there is significant ground to make up and significant benefit to be seen.
“Supply chains are getting to that stage now where they’re bringing up their cell capacity and going ‘What’s next? Let’s bring in the cathode material’,” says Leyland. “We can have that localized supply chain and that’s critical. There is a shipping cost saving, there’s also a reduction of risk in supply chains. Less can go wrong if you don’t have very far to ship.”