Honda Motor Co of Japan and Korean battery supplier LG Energy Solution Ltd have said they will set up a new lithium-ion battery plant for electric vehicles (EV) in the United States.
The investment will be $4.4 billion, the two companies said in a statement, and they are aiming for annual production capacity of approximately 40 gigawatts hour (GWh) with the batteries supplied exclusively to Honda facilities in North America to power Honda and Acura EV models.
The pair said they expect to establish a joint venture before building the plant, with the start of construction planned for early 2023 and mass-production by the end of 2025.
The location has not been finalised, they added, but the Nikkei business daily reported that they are considering Ohio, where Honda's main factory is located.
READ: California to ban sales of petrol-only vehicles by 2035
The two companies said a combination of strong local electric vehicle production and the timely supply of batteries would put them "in the best position to target the rapidly-growing North American EV market".
The US government has been pushing policies designed to bring more battery and EV manufacturing into the country. President Joe Biden recently signed a $430 billion climate, health care and tax bill that would render electric vehicles assembled outside North America ineligible for tax credits.
Meanwhile, the state of California last week announced a plan requiring all new vehicles sold in the state by 2035 to be either electric or plug-in electric hybrids.
LG Energy Solution, which is mainly engaged in the development of lithium-ion battery materials and next-generation batteries, also supplies EV batteries and has signed joint-venture agreements with General Motors and Hyundai Motor Co.
Earlier this year, Honda laid out a target to roll out 30 EV models globally and produce about 2 million EVs a year by 2030.
Contact the author at jon.hopkins@proactiveinvestors.com