LG Energy Solution and Honda building U.S. EV battery plant

Industry

Published: 29 Aug. 2022, 19:06

LG Energy Solution and Honda building U.S. EV battery plant

LG Energy Solution CEO Kwon Young-soo, left, and Honda Motor CEO Toshihiro Mibe pose for a photo after signing an agreement to establish a joint venture to build an electric vehicle factory in the United States, Monday at the Korean battery maker's headquarters in Yeouido, western Seoul. [LG ENERGY SOLUTION]

LG Energy Solution and Honda Motor are together investing $4.4 billion to build an electric vehicle (EV) battery plant in the United States, the first factory project developed by a Korean battery maker and a Japanese automaker.

The plant will be located in Ohio, according to Nikkei's reports, though LG Energy Solution did not confirm the location.

LG Energy is investing $2.24 billion for a 51 percent stake in the joint venture, with Honda owning the remainder.

Groundbreaking is scheduled for the first half of next year, with the goal of starting operations in late 2025.

The produced batteries will be supplied to Honda and Acura, the premium sedan brand under Honda.

The annual capacity will stand at 40 gigawatt-hours (GWh), which is enough to make some 600,000 EVs.

Honda is No. 6 automaker in terms of sales in the North American auto market, and has 12 manufacturing plants there. It announced earlier in the year that it will spend 5 trillion yen ($36 billion) by the end of 2030 to introduce 30 new EVs.

"The joint plant with Honda will be a chance for us to strengthen our presence in the North American EV market," LG Energy Solution CEO Kwon Young-soo said.

The investment came as the U.S. government on Aug. 16 passed the Inflation Reduction Act, which includes up to $7,500 EV tax credits for EVs that assembled in North America. The rule will have further restrictions starting in January 2023 which limit the origins of the minerals and components of batteries.

LG Energy Solution is making aggressive investments in expanding its capacity in the North American market. Ultium Cells, its 50:50 joint venture with General Motors, plans to build three more plants, one each in Ohio, Tennessee and Michigan. The Ohio plant is expected to start mass production in the second half of the year.

The company is also expected to break ground on a factory in Ontario, Canada, which will be constructed with Stellantis.

LG Energy Solution already has its own plant in Michigan. It previously announced that it will invest 1.7 trillion won ($1.3 billion) to build its second independent factory in Arizona, though the company has been reassessing the plan.

The battery maker's annual production capacity will likely increase to 255GWh by the end of 2025, which is enough to make more than 3 million high-performance EVs that can run over 500 kilometers per charge.

With the deal with Honda, LG Energy Solution now has eight of the world's 10 largest automakers as its customers, Toyota Motor and Suzuki Motor being the exceptions.

LG Energy and Honda signed the agreement Monday at the Korean battery maker's headquarters in Yeouido, western Seoul, with LG Energy Solution CEO Kwon and Toshihiro Mibe, Honda Motor CEO, in attendance.

BY SARAH CHEA [chea.sarah@joongang.co.kr]