GM Keeps Building Up Its EV Supply Chain. Here’s the Latest Deal.
General Motors is locking up another portion of its electric-vehicle supply chain with a new partnership. While that is good news for GM investors, it’s even better news for stock in the partner firm.
GM (ticker: GM) announced Thursday a “strategic collaboration to develop a fully integrated U.S. supply chain for rare earth magnets” with MP Materials (MP). These materials are for the magnets that go into electric motors.
MP stock jumped 12% in early Thursday trading, while GM stock slipped about 0.3%, in line with the overall market. The S&P 500
was down about 0.2%, while the Dow Jones Industrial Average is off about 0.4%.
MP will supply U.S.-sourced rare earth metals that make strong magnets work. Most rare earth metals come from China, but MP is building a domestic facility in Mountain Pass, California to create a domestic rare earth supply.
“We are building a resilient and sustainable EV manufacturing value chain in North America, from raw materials to cell manufacturing to electric drive motors and beyond,” said Shilpan Amin, GM vice president, global purchasing and supply chain, in the company’s news release.
Amin says a majority of the GM EV platform will be sourced and manufactured in North America by 2025. That’s up from very little today. In addition to the materials supply, GM is partnering with German manufacturer Vacuumschmelze to build a magnet plant in the U.S. The MP product will feed into that plant.
The magnets in GM motors are Neodymium-iron-boron. The Neodymium is the rare earth metal.
The agreement with MP Materials requires that there is no capital spending for GM. The price of the magnet plant wasn’t disclosed. Any capital, however, will come from the $35 billion GM plans to spend on electrification through 2025
“Restoring the full rare earth supply chain to the United States at scale would not be possible without U.S. manufacturers like GM recognizing the strategic consequence and acting with conviction,” said MP CEO James Litinsky in the joint news release.
GM has been doing a lot of work on the EV supply chain recently. The company has announced battery plants being built with battery partner LG Chem (051910.Korea), and early in December GM unveiled a deal with POSCO Chemical to build a plant for battery cathode materials.
Cathodes are one side of a battery. Anodes are the other side. A lithium ion battery cathode include materials such as cobalt, nickel, and iron.
Write to Al Root at [email protected]