Honda Motor Co of Japan and LG Energy Solution Ltd of Korea announced on Monday that they will establish a new lithium-ion battery plant for electric vehicles in the United States.
Battery manufacturers are looking to expand production in the United States, where a shift toward electric vehicles (EV) is likely as the country implements stricter regulations and restricts tax credit eligibility.
The investment will be $4.4 billion, according to the two companies in a statement, with the batteries being supplied exclusively to Honda facilities in North America to power Honda and Acura EV models.
The two are expected to form a joint venture before constructing the plant, with construction beginning in early 2023 and mass production beginning by the end of 2025.
They stated that the location has not been finalized, but the Nikkei business daily reported that they are considering Ohio, where Honda’s main factory is located.
The United States government has been pushing policies to increase battery and EV manufacturing in the country.
This month, President Joe Biden signed a $430 billion climate, health-care, and tax bill that would make electric vehicles assembled outside of North America ineligible for tax breaks.
California announced last week that by 2035, all new vehicles sold in the state must be electric or plug-in electric hybrids.
According to the two companies, a combination of strong local electric vehicle production and timely battery supply would put them “in the best position to target the rapidly growing North American EV market.”
LG Energy Solution, which primarily develops lithium-ion battery materials and next-generation batteries, also provides EV batteries and has joint venture agreements with General Motors, Hyundai Motor Co (005380.KS), and Stellantis.
Panasonic Energy Co, a subsidiary of Panasonic Holdings Corp and a major Tesla Inc supplier, announced in July that it had chosen Kansas as the location for a new battery plant with an investment of up to $4 billion.
Honda announced earlier this year that it intends to launch 30 EV models globally and produce approximately 2 million EVs per year by 2030.
(Adapted from Bloomberg.com)