General Motors said Thursday it will invest $43 million – part of the $241.4 million it got in federal grants last week – in a plant to make lithium-ion batteries for its promised Chevy Volt plug-in hybrid car, as well as future electric models.

The plant will be built in Brownstown Township, Mich., south of Detroit, and is set to start production in the fourth quarter of next year. That's the same timeframe GM has put on release of its first plug-in hybrid vehicle.

The announcement was expected, given that the Department of Energy grants GM and other companies received last week were aimed at building manufacturing facilities in the United States (see Feds Give $2.4B to Battery and Electric Drive Projects).

GM will assemble the 16-kilowatt-hour batteries using lithium-ion cells provided by a coalition led by Korean company LG Chem (see With General Motors Snub, is A123 on the Ropes?).

GM's Volt is seen as critical for reviving the automaker's fortunes as it emerges from bankruptcy with the federal government as a majority shareholder. GM has pledged to close about 13 of its 47 factories by the end of next year and shrink its U.S. workforce from 91,000 to 64,000 by the end of this year (see GM Finds New Life with eBay Deal, BYD Wants Green Bus Maker).

GM, which hopes to be the first automaker to mass-produce a plug-in hybrid electric vehicle, claimed on Monday that the Volt would be able to achieve a 230-miles-per-gallon rating for city driving under a yet-to-be released EPA methodology.

But the EPA quickly said it could not vouch for that claim, raising questions about whether the announcement would help or hurt GM if the Volt doesn't perform as well in real-world driving conditions (see Chevy Volt Claims 230 Miles Per Gallon in City Driving).