Samsung SDI and GM have entered into a $3.5 billion joint venture agreement to establish an electric vehicle battery manufacturing facility in the United States.

On Wednesday, Samsung SDI of South Korea announced that it has finalized an agreement with General Motors to establish a collaborative electric vehicle (EV) battery manufacturing facility in Indiana, USA.

The two companies plan to invest approximately $3.5 billion to construct a battery cell production plant, which will initially have an annual output capacity of 27 gigawatt hours (GWh), according to a statement from Samsung SDI.

Following the announcement, Samsung SDI's shares increased by as much as 3.2% during morning trading, contrasting with a 0.3% decline in the benchmark KOSPI index.

This initiative was initially revealed in April 2023, when GM and Samsung SDI indicated that the joint venture would require an investment exceeding $3 billion, with a targeted production capacity of 30 GWh and operations set to commence in 2026.

Samsung SDI stated that the joint facility aims to achieve mass production by 2027, with the potential to expand its annual capacity to 36 GWh.

Kurt Kelty, GM's vice president of battery cell and pack, mentioned that he collaborated with Samsung SDI's CEO to finalize the details of the battery joint venture.

Kelty indicated that the facility will possess the potential to scale up to 36 GWh by manufacturing prismatic cells, which will enhance our battery technology portfolio, enabling us to further improve performance and reduce costs in the future.

Last year, GM announced its expectation that the Indiana facility would feature production lines capable of producing both nickel-rich prismatic and cylindrical cells.

In June, GM revised its annual electric vehicle production forecast downward, as the company anticipates increased demand for its gasoline-powered vehicles. The automaker now estimates that the upper limit of its 2024 EV production will reach 250,000 units, a decrease from the previous estimate of 300,000 units.