Honda, LG will build $4.4bn EV battery plant

Honda Motor Co. and South Korean battery maker LG Energy Solution will spend $4.4bn to build a new battery plant in the US as the Japanese carmaker seeks to phase out fossil-fuel vehicles completely by 2040.

The plant will have an annual capacity of about 40 gigawatt-hours with mass production starting at the end of 2025, Honda said Monday in a company filing.

#BREAKING: Honda and LGES today announced an agreement to establish a joint venture to produce #electricvehicle batteries in the U.S.

The new initiative will power @Honda and @Acura #EV models built for our customers across North America. Learn more: https://t.co/YXHgyuzMoW pic.twitter.com/z3OYbwj1qv

— Honda In America (@HondaInAmerica) August 29, 2022

The duo will set up a joint venture for the plant with construction starting early 2023. The location of the plant is not decided. Bloomberg reported in June that Ohio is a front-runner. The Japanese firm already has carmaking plants there.

Honda plans to spend 5tn yen ($36bn) on its push into electric vehicles over the next decade by launching some 30 new EVs, one of the most aggressive expansions of electrification in Japan. The new plant will produce pouch-type cells for Honda and Acura’s EVs.

“Honda is working toward our target to realise carbon neutrality for all products and corporate activities the company is involved in by 2050,” Toshihiro Mibe, chief executive officer of Honda, said in a statement. “Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries which is a critical component of EVs. This initiative in the US with LG Energy Solution, the leading global battery manufacturer, will be part of such a Honda approach.”

Asian automakers are facing a new US law on energy and tax policy called the Inflation Reduction Act, which requires them to assemble EVs in the US and reduce dependence on China for using minerals in batteries in order to secure a maximum $7,500 subsidy. With the exception of Nissan’s Leaf, no other Japanese EV model would qualify for subsidies under the new rules.

South Korea’s trade minister Lee Chang-yang said Monday he will seek cooperation with Japan and European nations to ease the tough requirements on EV and battery makers.