LG Energy Solution is teaming with Honda Motor, investing $4.4 billion in building a new electric vehicle battery production plant in the US.
The automaker now joins General Motors, Ford Motor, Rivian Automotive and Hyundai Motor, as automakers increasingly invest in American production of EV component factories, to gain greater control of their supply chains as they strive to meet the government’s ever more stringent standards in pursuit of producing zero-emissions vehicles.
The new plant is expected to begin production of its advanced lithium-ion cell batteries by the fourth quarter of 2025. The construction and operation will be done by a joint venture between the two companies, that is to be formed later this year.
Many automakers are forming their own battery plants as a way of making sure they are in compliance with sourcing guidelines in the United States-Mexico-Canada Agreement (formerly the North American Free Trade Agreement) and, more recently, the Inflation Reduction Act. Both pieces of legislation placed more stringent requirements on domestically sourced parts and materials for automakers, which must be complied with in order to avoid tariffs on the parts and qualify for financial incentives.
Honda currently has large manufacturing facilities in Alabama, Indiana, and Ohio, and while no proposed location for the new manufacturing facility was announced, automakers usually place such facilities near their assembly operations.
Annual production capacity of the new plant is expected to be around 40 gigawatt hours, which is roughly consistent with that of other plants announced by other manufacturers. Honda had announced earlier in the year that it planned to release 30 vehicle models globally, and produce roughly 2 million Electric Vehicles by 2030.
The CEO of LG Energy Solution, Youngsoo Kwon, said the plant was, “another milestone” for LG, which has also opened up joint ventures with GM, Hyundai and Jeep-maker Stellantis.
Honda CEO, Toshihiro Mibe, said in a release, “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.”
The Daily Financial Trends
