GM to Source Batteries from China's CATL for Two Years Amid Tariffs

General Motors plans to purchase batteries from China's Contemporary Amperex Technology for its Chevrolet Bolt electric vehicle despite tariffs. The batteries will be sourced from China for about two years until LG Energy Solution, GM's Korean partner, can manufacture lower-cost batteries in the US.

Despite the heavy 80% duties on Chinese batteries, General Motors (GM) has announced its intention to continue importing and using these batteries for its Chevrolet Bolt electric vehicle (EV). This decision is part of GM's strategy to maintain competitive pricing and production timelines for its most affordable EV model.

GM will rely on batteries from Contemporary Amperex Technology Co. Ltd. (CATL) for approximately two years until its joint venture with LG Energy Solution begins local production of lithium iron phosphate (LFP) batteries in Tennessee by 2027. The new generation Chevrolet Bolt is set to be assembled at the Fairfax Assembly Plant in Kansas later this year and will arrive in dealerships in 2026, priced at around $30,000.

The 80% tariff on Chinese EV batteries has not deterred GM from pursuing this arrangement. The automaker views it as a necessary measure to keep its pricing competitive and production timelines on track. According to Sam Abuelsamid, an analyst at Telemetry, LFP batteries are roughly 35% cheaper to produce than nickel- and cobalt-based alternatives [1].

GM's decision to source batteries from China temporarily aligns with the practice of other U.S. automakers who have relied on foreign suppliers for LFP battery sourcing and licensing. Ford, GM’s key rival, is currently licensing CATL’s LFP technology and manufacturing process for a new factory in Michigan. Tesla previously used CATL’s LFP batteries in some Model 3 units until it ceased the arrangement following an escalation in U.S. tariffs earlier this year [1].

The adoption of LFP batteries, coupled with other efficiencies GM has achieved in EV production, could allow the new Bolt to be "marginally profitable" or "close enough," even with the tariff burden. The U.S. EV tax credit policy, which provided a $7,500 federal tax credit for EV purchases, will be scrapped starting next month. With the incentive gone, GM’s Bolt will no longer be at a comparative disadvantage in the marketplace [1].

The Chevrolet Bolt was first introduced in 2016 and discontinued in 2023. GM plans to bring the model back as part of its goal to expand affordable EV options. The base price is expected to settle around $30,000, after factoring in the elimination of the tax credit.

References:
[1] https://www.mitrade.com/cn/insights/news/live-news/article-3-1021970-20250808