Japanese automaker Honda Motor Co. Ltd. and South Korean battery producer LG Energy Solution announced on Aug. 29 that the companies will invest in a new lithium-ion battery plant for electric vehicles (EVs) in the United States.
The two East Asian companies are expected to shortly sign a joint venture agreement before proceeding with the $4.4 billion investment in the EV plant.The Biden administration has been pushing policies designed to bring more investment in battery and EV manufacturing into the United States, causing a major rush by companies worldwide to build production lines here as state governments implement stricter regulations and tax credit eligibilities to encourage more widespread use of EVs.
California regulators recently announced a bill that would ban the purchase of all new combustion engine vehicles in the state by 2035, making only electric or electric hybrid vehicles available to consumers there.
LG is aiming for an annual production capacity of approximately 40 GWh at the new plant, with the EV batteries being supplied exclusively to the Japanese car company’s North American plants for Honda and Acura EV models.
According to Bloomberg, Ohio is considered to be a frontrunner for the new factory, as Honda already has its main American facilities in that state.The car company said it will hold a 49 percent stake by investing $1.7 billion into the project.
Research and Development
Honda announced in April that it would spend $64 billion on research and development to reach its target to roll out 30 new EV models globally at the rate of about 2 million vehicles per year by 2030.The Japanese carmaker said that it seeks to phase out gas and diesel powered vehicles completely by 2040.
The start of construction is planned for early 2023 and mass-production by the end of 2025.
LG, which is known globally for its development and production of lithium-ion batteries used for electronics and vehicles, has also signed joint-venture agreements with General Motors Company (GM), Hyundai Motor Company, and Stellantis N.V.LG announced a joint plan with GM in January to build its third $2.1 billion battery factory in the United States for the American automaker, with construction expected to start in early 2023.
The company said it’s already building two plants with GM in Ohio and Tennessee to manufacture enough batteries to produce 70 GWh of power, which is expected to supply about 1 million EVs by 2024.
Rival battery maker Panasonic Energy—a unit of Panasonic Holdings Corp. of Japan and one of the main suppliers for Tesla Inc.—said in July that it would invest in a new $4 billion battery plant in Kansas.
Part of President Joe Biden’s “Inflation Reduction Act,” made electric vehicles assembled outside North America ineligible for future tax credits of up to $7,500 per car, to encourage manufacturers to assemble EVs in the United States.
The overall plan is to reduce dependence on Chinese sourced minerals used in battery production and Chinese battery makers by 2024.
The new restrictions on battery and mineral sourcing and price and income caps will take effect on Jan. 1, 2023, making nearly all EVs ineligible for the subsidy, according to the Alliance for Automotive Innovation, an industry trade group.
After 2024, any EV model may be labeled ineligible for EV tax credits if it has components made from a “foreign entity of concern,” a provision aimed at Communist China.
Reuters contributed to this report.
