GM to rebuild supply chain, emphasizes responsible sourcing of EV power

DETROIT—Mining company executives. Non-automotive suppliers. Engineers. Battery supply chain and purchasing experts. They've all found a seat at General Motors' table as the auto maker reinvents the supply chain for electric vehicles.

"When we define what our value chain will be, it will look nothing like the value chain that exists today," said Shilpan Amin, GM's vice president of global purchasing and supply chain.

GM brought in outside experts, along with cross-functional internal teams, to inform its battery development plan and ensure that battery materials, such as lithium and cobalt, are sourced responsibly and economically.

None of the experts alone is a silver bullet for GM's strategy, Amin told Automotive News. GM needed an array of perspectives to assemble its plan. Once the automaker developed a consortium to learn from, "all of a sudden the pieces started to fall together," Amin said.

The auto industry's move toward electrification, including GM's commitment of $35 billion in electric and autonomous vehicle development through 2025, has emphasized efficient and responsible sourcing of the materials that make up batteries to power EVs. Today, GM and its peers rely on a longstanding supply chain with Tier 1 through Tier 4 suppliers coordinating to meet the automaker's needs. The battery landscape marks new ground, without a map of familiar suppliers, and Amin says the network is ripe for innovation and reinvention.

In the internal-combustion vehicle business that has been at GM's core for more than a century, there is certainty in volume, launch cadence, customer base and supply chain, Amin said.

"In this case, we're using a whole different set of raw minerals," he said. "We're transforming the industry, and there's a lot of variability in what that acceleration to a conversion of the all EV the future looks like."

GM is weeks away from launching the GMC Hummer EV, the first nameplate powered by its proprietary Ultium batteries. Through 2025, GM plans to roll out 30 EVs powered by Ultium batteries, and the automaker aims to fully electrify its light-vehicle portfolio just a decade later. Sourcing the key materials used in Ultium batteries, including lithium, cobalt and nickel, will be essential as GM makes that transition.

Early visibility allows GM to better respond to demand and sourcing changes, in part with staged capital investments.

"That is the benefit of working throughout the entire value chain," Amin said. "We know when decisions are needed, and we hold ourselves accountable to make the decisions at the right time."

GM's goal to take a prominent position in the battery supply chain came together before the global microchip shortage and pandemic roiled the industry, but the crises highlight the importance of automakers' role.

In late 2019, when GM announced it would develop proprietary Ultium batteries through a joint venture with supplier LG Energy, GM's leaders knew the automaker must redefine the supply chain to accelerate EV production and adoption, Amin said.

The chip shortage "allowed us to think about the risk factors in a different way and how quickly those risk factors can impact the business," he said.

GM executives had to act fast when learning of shortages. The ability to make quick calls and discuss concerns and solutions in real time "gives you confidence in resetting the strategy in an area that you have no experience," Amin said.

The lag time for semiconductors is longer than the wait for many other automotive components, so just-in-time delivery isn't feasible. Sourcing materials for batteries requires even more foresight. It can take seven to 10 years to establish lithium extraction sites, for example, Amin said.

Now GM is considering not only capacity but also sustainable extraction processes, logistics and geopolitical risk as it develops batteries.

"Those elements aren't things we traditionally thought about in setting up our value chain," Amin said.

GM has been encouraging and supporting more sustainable practices across its existing supply chain, Amin said, but in the battery space, GM can build the network with sustainable practices from the start.

"EVs alone are a great contributor to reduce greenhouse gas, but there are many other opportunities behind that," Amin said. "We are looking at the entire value chain: How do we do it in the most sustainable way? How do we protect that it's done socially correct, environmentally correct and with governance? And how do ... we know with confidence we'll have the right material at the right time to deliver on our product portfolio?"

Sourcing lithium, a key material in today's batteries and in solid-state batteries that the industry is working toward using in the future, is paramount to GM's EV plans. And extracting it in a sustainable, economical way has become crucial. GM and its partners are rethinking methods.

None of the lithium used in EV batteries today is extracted in North America. Most is mined in other parts of the world, processed in China and eventually sent to North American plants.

"That value chain doesn't work for us," Amin said. "You actually have to go understand where in the Earth's crust and the quantity that's in the Earth's crust and the quality of that material that makes automotive grade and where that exists in the world."

GM has partnered with Controlled Thermal Resources to extract lithium from the Salton Sea in Imperial, Calif. GM and Controlled Thermal Resources expect the project to yield battery-grade lithium by 2024.

The automaker has inked many other agreements, such as a tie-up with GE Renewable Energy to improve supplies of rare-earth materials and magnets for electric motors, a deal with Wolfspeed Inc. to develop silicon carbide solutions for power electronics within GM's Ultium Drive units and a joint venture with Li-Cycle to recycle up to 100 percent of the material scrap from battery cell manufacturing. The automaker says there are more partnerships to come.

"When we talk about Ultium, we are redefining the entire strategy," Amin said. "I'm confident when that strategy is executed, it will be in a very sustained, secure and capable value chain."