Posco Chemical said Tuesday it will build an electric vehicle material factory with General Motors in Canada.

According to the refractory and secondary battery materials arm of South Korean steel giant Posco, the two firms will together invest $400 million to construct the first phase of a cathode production facility in Quebec, Canada.

The two parties discussed a joint cathode factory since December. More investment will be made depending on GM’s future EV business.

Cathodes are materials that go inside the plus sides of EV batteries. They determine how powerful batteries can become. Comprised of expensive metals such as nickel and cobalt, cathodes account for roughly 40 percent of the total cost of EV batteries.

Cathodes produced at the Canadian facility will be supplied to Ultium Cells, a joint venture between LG Energy Solution and GM. Ultium Cells currently plans four EV battery factories in North America.

The partnership with GM will allow Posco Chemical to take the initiative in the North American EV market, the size of which is expected to grow 58 percent per year from 46 gigawatt-hours in 2021 to 143 GWh in 2023 and to 286 GWh in 2025, according to IHS Markit. On top of the Canadian facility, Posco Chemical is planning expansions in Europe and Indonesia to achieve a global annual production capacity of cathodes worth 105,000 metric tons in 2022, 280,000 tons in 2025 and 420,000 tons in 2030.

GM is one of the major automakers driving EV battery demand. The US carmaker aims to manufacture more than 2 million EVs per year starting in 2025, half of which will be made in North America.