General Motors tapped its tariff-mitigation playbook the week of Aug. 4, inking three deals with new partners that will allow the automaker to better navigate this current landscape.

One partnership aims to generate additional revenue, another should directly protect the automaker from import costs, while the third puts GM directly in the line of fire of tariffs, but only temporarily.

The GM logo is seen on the facade of the General Motors headquarters in Detroit on March 16, 2021. Picture taken March 16, 2021

Automaker partnership

GM and Hyundai Motor announced on Aug. 6 the first vehicles the companies plan to jointly develop. Four of the vehicles — a compact SUV, a car, a pickup and a midsize pickup — are intended for retail sales and will support both internal combustion and hybrid powertrains. The automakers also said a co-developed electric commercial van is in the works.

Shilpan Amin, GM senior vice president and global chief procurement and supply chain officer, said on Aug. 7 that the vehicles announced will be targeted at the largest segments in the Central and South American markets, as well as the commercial segment in North America.

“By partnering together, GM and Hyundai will bring more choice to our customers faster, and at lower cost,” Amin said in a statement. “These first co-developed vehicles clearly demonstrate how GM and Hyundai will leverage our complementary strengths and combined scale.”

The truck, for which GM will be responsible, could be based on the platform for the next-gen Canyon or Colorado, proposes Sam Abuelsamid, vice president of Telemetry.

“When you have a partnership like this, the automakers try to structure it where each gets something out of it in terms of scale, components or manufacturing capacity,” he said. “Some of these vehicles, most likely, will be built at GM plants, some will be built at Hyundai facilities, but ultimately will provide more scale, which tends to mean cost reductions.”

If the van is based on a Hyundai platform and in North America, Abuelsamid said he would not be surprised if Hyundai constructed it at its plant in Savannah, Georgia.

Battery deal with China

GM confirmed to the Free Press that the deal will function as a “stopgap” until it can manufacture its own lower-cost batteries made with lithium iron phosphate chemistry in the U.S. alongside South Korean battery partner LG Energy Solution. GM would not confirm the specific company that makes the batteries, though Reuters reported that sources familiar with the matter believe it to be CATL.

“For several years, other U.S. automakers have depended on foreign suppliers for LFP battery sourcing and licensing. To stay competitive, GM will temporarily source these packs from similar suppliers to power our most affordable EV model,” GM spokesman Kevin Kelly said in a statement. “We’re proud that we sell 12 EVs in the U.S. using domestically produced battery cells, and in 2027 we will bring LFP production to the U.S., further cementing our unique and resilient U.S.-based supply chain.”

The batteries are slated for the new Chevrolet Bolt, which is planned to go into production in the fourth quarter of this year.

Currently, there is no company producing lithium iron phosphate batteries at volume except for LG Energy Solution in its Holland, Michigan, plant, though that plant is focused on producing pouch cells for energy storage.

Prismatic cells that are light on nickel boast another advantage ― in addition to a cheaper chemistry, the shape allows automakers to pack in more cells to a battery, Abuelsamid said. The pouch designs separate the cells through layers and limit how many cells rest in one pack.

“The pouch shape helps to isolate the cells, so in case ... you do have a defect or thermal runaway, it’s less likely to spread to the entire battery pack,” he said. Automakers “didn’t realize how long the battery packs will last, so the module format helps with serviceability.”

Of the total battery pack volume in modular systems, only 30% to 35% is devoted to active cell material storing energy, Abuelsamid added, because the box, the wiring and cooling components eat up the remaining space.

“When you get rid of those modules and go to a structural design, you can fill up that pack with cells. Or, conversely, you can also make a battery with the same capacity that’s half the size,” he said. So even importing these batteries from China, “GM must feel that the net cost makes sense on a temporary basis. It’s probably going to still be cheaper than building now with nickel-rich cells.”

Rare magnet agreement in Texas

GM signed a multiyear supply agreement with Texas-based Noveon Magnetics for rare earth magnets in an effort to decrease reliance on foreign-sourced materials. Automakers, especially those focused on EVs, are among the largest industrial consumers of rare earth materials and have struggled in recent months to obtain supply tied up in the fluctuating tariff environment.

Noveon is the sole operational manufacturer of sintered neodymium-iron-boron rare earth magnets, the most powerful available commercially, in the U.S. The magnets are deployed in the motors of electric and hybrid vehicles among other uses. Noveon said in a news release the agreement is to supply rare earth magnets to support GM's full-size SUVs and trucks. Rare earth magnets are seen as the most efficient way to power EVs and are known to improve torque.

GM also maintains a relationship for rare earth magnets with California-based MP Materials, the only active and scaled rare earth production site in America. MP Materials broke ground in 2022 on its first rare earth metal, alloy and magnet factory in Fort Worth, Texas, where it will take the mined minerals and make them into finished alloy and magnets for GM's EVs starting later this year.

Automakers require multiple sources for magnets because different grades of magnets are used for different applications. Magnets from MP are destined for electric vehicle drive motors, for example, while the deal with Noveon will supply magnets for internal-combustion engine truck production.

Senior autos writer Jamie L. LaReau contributed to this report.

Jackie Charniga covers General Motors for the Free Press. Reach her at [email protected].

This story was updated to add a gallery.