General Motors and the sprawling LG Group have been so happy with their teamwork on the Chevy Volt that they will expand their collaboration.
The two companies announced today that they will cooperate on future electric and plug-in cars. Right now, LG Chem produces battery for the Chevy Volt and the Opel Ampera, the version of the Volt for the European market. It also made battery packs for a electric demonstration version of the Chevy Cruze. As the alliance develops, LG will also participate in working on vehicle structures and architectures. In other words, problems and challenges that lie beyond the battery.
If anything, LG gives GM access to quite a bit of technology. Founded in 1947, LG is a sprawling conglomerate with expertise in communications, computing, LCD screens, software, plastics, air conditioning and other products. Revenue in 2010 came to around $89 billion. It has often played second fiddle to Samsung, but in the past decade it is safe to say that both companies have emerged from the middle of the pack to set the agenda for many segments of the consumer electronics industry. LG is also known for its high-quality manufacturing and its take-no-prisoners attitude toward competitors.
One area of potential cooperation could lay in chassis and body materials. The U.S. and other nations have passed more stringent automobile mileage standards in recent years. The fleet MPG for new cars is supposed to hit 54.5 miles per gallon by 2025. Shedding weight from cars will likely become one of the primary means for hitting that target, according to, among others, Gordon Murray, CEO of Gordon Murray Designs and a noted Formula One designer. Murray, for instance, has developed a system for producing cars from materials that cut 50 percent of the weight and massively reduce the factory footprint.
Car manufacturers will thus have to start swapping steel for aluminum and industrial plastics. LG Chem has an extensive cookbook for materials. (For more on the technologies that car makers will likely adopt to hit their mileage goals, click here.)
GM rival Ford, of course, has pals in electronics, too. Ford works with Microsoft on in-car telematics and uses Google APIs to improve the range on its electric vehicles. (Meanwhile, Toyota and Tesla Motors work with Panasonic.)
Interestingly, A123 Systems earlier this month announced that it had landed a deal to supply batteries for a GM car. A123 fanboys gushed at the news. We were a little more cautious. With GM and LG in a love embrace, it will become that much harder for A123. A123, after all, lost the Volt contract to LG. GM recently announced it would produce a hybrid version of the Cadillac Converj, otherwise known as the world's ugliest luxury car. The Cadillac is not mentioned in today's LG announcement. Perhaps A123 is working with GM on that car. But in any case, getting GM's business is not going to be easy for any competitors.