DETROIT – General Motors plans to form a new joint venture with a South Korean chemical company to produce the critical materials needed for EV batteries — a significant move to control its supply chain and lessen the chances of disruptions in the future.

On Wednesday, the Detroit automaker said that it had signed a term sheet non-binding with Posco Chemical in order to form the joint venture. It expects to sign definitive agreements shortly.

GM shares rose by 4% to $60.30 per share during Wednesday morning trading.

They plan to build a new North American facility by 2024. GM announced that the new plant will be used to process crucial battery materials, known as Cathode Active Material or CAM for GM’s electric cars.

According to the automaker, CAM make up about 40% of a cell’s cost. GM uses cathodes that are nickel-cobalt or other materials in its new battery designs.

GM and the other major automakers are working together to create integrated and offshore supply chains for batteries in electric cars to decrease costs and minimize disruptions.

In light of the ongoing globalization, the Biden administration has also urged businesses to send work to America. shortage of semiconductor chips – mainly supplied from Asia – causing massive shutdowns of factories.  

However, the automaker did not release any details regarding the cost of or location of the facility. This will provide the material to the company. announced battery plantsGM North America prior to the final agreement being signed.

Doug L. Parks was the executive vice president of global purchasing, product development, and supply chain and stated to media that “This will be a pretty substantial investment for both GM, and Posco.”