Chevrolet Volt to ride out on Korean batteries bought on more federal loans

General Motors has announced ambitious plans to research and assemble lithium-ion batteries in Michigan, while choosing a Korean company over a German one to supply cells that will power its Chevrolet Volt electric car, even as executives talked about the prospect that the company, which is already alive on federal life support funding, will need more loans from Uncle Sam in case the US auto market does not revive.

In its projection of its worst-case scenario to the US government last year, reports said that GM would need $18 billion in loans, $4.6 billion over what the Bush administration has granted.

Compact Power pipped German rival Continental AG for the contract, which was partnering with startup A123Systems Inc., on the project.

On a brighter note, the assembly of batteries for the Chevrolet Volt, would need the establishment of a battery factory that would most probably be set up somewhere near Detroit, reports said, and is projected to have an employee base of over 100 people. The factory was projected as a highly automated shop floor which will use cutting-edge lithium-ion cells imported from South Korean manufacturer LG Chem Ltd and will weld them into battery packs that will power the Chevy Volt and other next-generation electric or hybrid vehicles.

GM CEO Rick Wagoner said that battery cells for the battery packs would be supplied to the plant by Compact Power Inc., a unit of Seoul-based LG Chem Ltd.

He said while the plant's location would be most probably be determined sometime this quarter subsequent to state and local negotiations, and till then, Compact Power will make the battery packs until GM's facility commences operations. An LG Chem plant in South Korea will start making battery cells in the first half of 2010.