South Korean battery maker LG and Japanese car maker Honda announced on Monday that they would be investing $4.4 billion in a joint venture in the US to produce lithium-ion batteries for Honda's electric vehicles.
The location for the production facility has yet to be determined, but the two companies said they planned to begin construction in 2023 to mass produce the lithium-ion battery cells by 2025.
Honda already has large factories in the states of Ohio and Indiana, where the car maker produces the Accord, CR-V and Civic and models.
The batteries produced at the plant will be supplied exclusively to Honda facilities in North America, the joint statement said.
“Our joint venture with Honda, which has significant brand reputation, is yet another milestone in our mid- to long-term strategy of promoting electrification in the fast-growing North American market,” said LG chief executive Young-soo Kwon.
Honda's joint venture plant is part of a larger trend of car makers announcing US battery factories as they try to establish a domestic supply chain for the next generation of vehicle propulsion. Ford, General Motors, Toyota, Hyundai-Kia, Stellantis and VinFast have announced plans for 10 US battery plants.
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A new US law gives them even more incentive to build batteries in North America, as it includes a tax credit of up to $7,500 for car buyers that could defray the cost of purchasing an electric vehicle.
But to qualify for the full credit, the electric vehicle being purchased must contain a battery built in North America, with 40 per cent of the metals mined or recycled on the continent.
Demand for electric vehicles is expected to grow in the US and many other nations because of concerns about climate change and pollution, as well as rising petrol prices.
“Honda is working towards our target to realise carbon neutrality for all products and corporate activities the company is involved in by 2050,” said Honda president and chief executive Toshihiro Mibe.
The LG and Honda joint venture is scheduled to be established this year, subject to regulatory approvals.
The Associated Press contributed to this report
