DOW JONES NEWSWIRES

General Motors Corp. (GM) will establish the first lithium-ion battery-pack factory operated by a major auto maker in the U.S. to produce battery pack systems for its Chevrolet Volt plug-in electric car.

GM is looking to the much-hyped Volt to do what the Prius hybrid did for Toyota Motor Corp. (TM) - give the auto maker a must-have technology while cultivating a green image.

Preparation for the plant, to be located in Michigan, will begin in early 2009, with production tooling to be installed mid-year and output starting in 2010.

Until GM's battery facility is operational, Volt's battery cells will be supplied by LG Chem Ltd.'s (051910.SE) Compact Power Inc. unit, which is based in Troy, Mich. A joint engineering contract with Compact Power and LG Chem is expected to speed up development of the Volt's lithium-ion battery technology. GM has been testing battery packs for the Volt, powered by cells from LG Chem, for the past 16 months, with tests - both on the road and in the lab - providing "invaluable insight into lithium-ion battery technology."

"The design, development and production of advanced batteries must be a core competency for GM, and we've been rapidly building our capability and resources to support this direction," Chairman and Chief Executive Rick Wagoner said during the North American International Auto Show, where the Volt concept was rolled out two years ago.

Wagoner said more than $1 billion has been committed to the Volt, GM's most high-profile project. Uncertainty over its future widened in mid-December after GM delayed construction of a Flint, Mich., factory slated to build the car's engine.

GM's situation has deteriorated significantly, and the auto maker has burned through billions each quarter. GM, along with Chrysler LLC, secured $17 billion in federal loans in December.

Batteries have been one of the biggest hurdles for U.S.-based electric and hybrid vehicle manufacturers. Batteries have been made in volume in Japan, Korea and elsewhere in Asia, and auto makers have been concerned that if battery supplies tighten, expensive Asian battery-making capacity may go to Asian auto makers first.

GM shares recently traded up 1% to $4.08. The stock has fallen over 80% in the past year.

-By Shirleen Dorman, Dow Jones Newswires; 201-938-2310; shirleen.dorman@dowjones.com

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