Honda and LG Energy to invest $4,4 billion in US battery plant

Japanese carmaker Honda is joining forces with South Korean LG Energy Systems (LGES) to build a new lithium-ion battery cell factory in the US for supplying exclusively Honda and Acura branded EVs. The plant, in which both parties are investing $4,4 billion, will have an annual production capacity of approximately 40 GWh by the end of 2025.

By 2030, Honda wants to have 30 EVs on offer globally, representing a total annual production of two million vehicles. Last year, the manufacturer announced that it would not sell ICE cars anymore as of 2040.

Close to the customer

“Aligned with our longstanding commitment to building products close to the customer, Honda is committed to the local procurement of EV batteries which is a critical component of EVs,” says Toshihiro Mibe, President, CEO, and Representative Director of Honda Motor in the press release.

EV batteries are bulky and heavy and cost a lot to transport, not to mention the safety risks while en route, so this makes sense. But Joe Biden’s Inflation Reduction Act (IRA) passed by Congress this month is likely to have helped the motivation of the Japanese and South Koreans to produce locally in the US.

Sourced from North America

The Act aims to invest $369 billion over ten years into energy and climate programs, providing several tax credits and incentives to promote clean energy technologies. Some $40 billion in tax credits are included for eligible battery-powered electric vehicles, which must meet critical mineral and battery component content and other requirements sourced from the US to qualify.

Vehicles must be built in North America, and 50% of crucial battery components, like cathodes and anodes, must be made locally. To get the full credit up to $7 500, at least 40% of critical battery materials have to be mined, refined, or recycled in North America or ‘friendly’ countries with which it has free trade agreements.

Honda stated before it will ensure stable procurement of liquid lithium-ion batteries in each region by strengthening the external partnership. For example, in North America, it will work with GM and LGES, in China with CATL, and in Japan with Envision AESC.

Two EV models developed with GM

Honda and LG Energy Solutions didn’t specify where the new battery cell production facility will be plumped down, but generally is assumed Ohio, where Honda has its most extensive car manufacturing facility in Marysville, is the most likely candidate.

In North America, Honda will introduce two mid-to large-size EV models developed jointly with GM in 2024, the all-new Honda Prologue SUV and an Acura SUV model. In China, Honda will introduce ten new EV models by 2027. In Japan, Honda will first present a commercial-use mini-EV model, then personal-use mini-EVs, and EV SUVs.

In 2026, Honda will begin adopting Honda e: Architecture, an EV platform that combines hardware and software. Through the alliance with GM, Honda plans to introduce affordable EVs in 2027, with a cost and range as competitive as gasoline-powered vehicles, starting from North America.