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GM announces another electric car partnership

DETROIT — General Motors announced its second major electric vehicle partnership in less than a week on Tuesday — this time a $2 billion deal with startup Nikola.

GM will take an 11 percent ownership stake in the Phoenix company and will engineer and build Nikola’s Badger hydrogen fuel cell and electric pickup truck. The Badger is expected to be in production by the end of 2022.

That timeline coincides with completion of GM’s high-tech electric vehicle battery-cell plant under construction in Lordstown that will provide the cells for the new truck, a GM spokesman confirmed Tuesday.

The $2.3 billion Ultium Cells LLC plant, a joint venture with South Korea’s LG Chem, will factor heavily into GM’s all-electric future. Cells made at the plant also will power 11 of 13 electric vehicles GM plans to roll out in the next five years and in two new electric vehicles under development with Honda.

In exchange for the 10-year deal with Nikola, GM will get $2 billion worth of Nikola’s newly issued common stock that will come in three increments through 2025. GM also will help with cost reductions for Nikola’s other vehicles including heavy trucks, and the company will use GM’s battery system and hydrogen fuel technology.

The move sets up GM for a new revenue stream and possibly a change in its business model, essentially becoming a parts supplier to other companies for electric vehicle frames, batteries, controls and components.

GM CEO Mary Barra said the deal creates a “platform that others can use that’s going to give us scale and help us drive efficiency costs down.”

She didn’t comment on whether GM is in talks with other companies to license its technology.

Nikola will be responsible for the sales and marketing of the Badger, but it will be built on GM’s new battery electric truck underpinnings and use GM fuel cell and battery technology. GM also will supply batteries for other Nikola vehicles including heavy trucks.

GM has its own battery electric truck, a GMC Hummer, due to go on sale a year ahead of the Badger. The Hummer also will contain Lordstown-made battery cells.

Tom Gallagher, Ultium Cells LLC plant manager, said production equipment installation at the plant will be phased in starting in the third quarter of 2021 with the start of production set for the third quarter of 2022.

The facility at full production will employ about 1,000 production employees and about 200 salaried support team members. Construction on the sprawling facility on 158 acres immediately adjacent to GM’s former automaking assembly plant is underway with more than 250 tons of steel already erected.

“This is really a purpose-built building,” Gallagher said last week during an economic summit hosted by Youngstown State University. “The nature of our process beginning with raw material and chemicals through completing the cell assembly for a battery-cell requires very unique components from a facility design where it is a clean room environment with unique temperature and humidity control requirements.”

GM expects to get more than $4 billion in benefits from the deal with Nikola with the stock as well as from contracting to manufacture the Badger. GM also will get supply contracts for batteries and fuel cells and electric vehicle regulatory credits that can be sold to other companies that don’t meet fuel economy or pollution standards.

Nikola expects to save more than $4 billion in battery and powertrain costs over 10 years.

The announcement with Nikola is the second major partnership announced by GM this month as it lines up companies to share in the costs of developing electric and autonomous vehicle technology. On Thursday GM said it would join with Japanese automaker Honda to share the costs of building vehicles powered by batteries and internal combustion engines.

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