Samsung SDI CEO Choi Yoon-ho, right, speaks with GM Chair and CEO Mary Barra in Michigan in this March 2023 file photo, after signing a contract to build a joint factory for electric vehicle batteries. Courtesy of Samsung SDI

Samsung SDI and General Motors (GM) have signed a contract to build a joint factory for electric vehicle (EV) batteries in the U.S. state of Indiana by investing $3.5 billion (4.65 trillion won), they said Wednesday.

The battery cell plant is set to start operation in 2027 with an annual production capacity of 27 gigawatt-hours (GWh). The capacity is also expected to rise to up to 36 GWh with their additional expansion plans.

The facility will focus on producing nickel, cobalt and aluminum batteries to be deployed for GM's future EVs. Samsung SDI's prismatic batteries have key upsides, including improved travel range and safety, with a metal exterior and venting system.

Both firms also expect the factory to contribute massively to the regional economy, creating some 1,600 jobs there.

Under the latest agreement, Samsung SDI will invest around 2.29 trillion won between October 2024 and March 2028. This will allow the company to secure a 50.01 percent stake in the joint venture.

"Building on last year's partnership with GM, we have established a premium battery production hub to lead the U.S. EV market," Samsung SDI CEO Choi Yoon-ho said.

"Samsung SDI will make best efforts to support GM enhance its leadership in the EV market with the firm's PRiMX battery products."

The joint venture will be located in New Carlisle, Indiana, on a 2.77 square-kilometer site. After clinching the earlier joint venture agreement in 2023, both firms have since fine-tuned details on the facility before finalizing the contract.

GM Chair and CEO Mary Barra also spoke highly of the latest partnership with Samsung SDI.

"The Samsung SDI joint venture is the latest example of GM's commitment to driving innovation in America," she said. "The EV market and GM sales will continue to grow as more customers experience our EVs, the charging infrastructure builds out and we expand into more segments."

The joint venture will help Samsung SDI to gain a stronger foothold in the North American EV market, meeting demand from customers and clients who want prismatic batteries with ensured safety, according to Samsung SDI.

"The agreement is rooted in a shared commitment to the growth of the EV market," an official from Samsung SDI said.

"Both firms have been closely monitoring the rapidly changing market conditions and have decided to invest in the joint venture to stay aligned with the market pace," the official added. "The two companies will continue expanding their strategic partnership onward."