General Motors Co GM.UL said on Tuesday it would have a Flint, Michigan, plant retooled to produce engines for its upcoming Cruze small car and its Volt electric vehicle by late 2010.
GM, which emerged from bankruptcy in July, was forced to scrap plans to build a new engine plant in Flint to produce the four-cylinder engines for the Cruze and the Volt last year as it struggled to conserve cash.
Both vehicles are crucial to GM's effort to reinvent itself to compete in the market for smaller and fuel-efficient vehicles.
GM said on Tuesday that it was investing $230 million on four Flint-area plants to supply the Cruze and Volt.
Just over $200 million of that investment will go to retool GM's Flint Engine South complex to produce the 1.4-liter turbocharged engine for the Cruze and the 1.4-liter generator for the battery-powered Volt, the automaker said.
The Flint engine plant will produce 40 engines per day when production starts late next year and ramp up to 800 engines per day by the fall of 2011, GM officials said.
The initial batch of engines for the Chevy Volt will be imported from a GM engine plant in Austria until the revamped Flint plan begins production.
The Volt represents the next generation of high fuel efficiency vehicles, said GM manufacturing chief Larry Zahner. We have to convince people this is an everyday car.
GM is designing the Cruze to get more than 40 miles per gallon in highway driving. The Volt will carry a lithium-ion battery pack that will allow it to be driven for 40 miles without gasoline. The on-board engine will provide power to the battery on longer trips.
The Cruze is scheduled to go into production in April at GM's Lordstown, Ohio, plant.
The Volt will be built at GM's Hamtramck, Michigan, plant. Battery cells for the Volt will be supplied by Korea's LG Chem (051910.KS) and assembled into packs at a GM plant outside Detroit.
GM has said it plans to build 10,000 Volts in the first 12 months of production. The Volt will go on sale in late 2010.
(Reporting by Bernie Woodall, editing by Matthew Lewis)