Bloomberg News reports that Honda Motor Co. and LG Energy Solution Ltd., the South Korean battery maker, will be spending $4.4 billion to build a new battery plant in the United States as the Japanese automaker is seeking to phase out fossil-fueled vehicles by 2040 completely.
The plant is expected to have an annual capacity of around 40 gigawatt-hours with mass production, which is anticipated to begin by the end of 2025, as stated by Honda on Monday in a company filing. The duo will set up the joint venture in the current year in which Honda will hold a 49% stake once it invests $1.7 billion. Construction of the EV battery plant is expected to begin by 2023.
The location where the EV plant will be set up has not yet been decided. In June, Bloomberg reported that one of the front-runners in Ohio, the Japanese automaker, already has plants set up in that area.
Automakers across the globe are scrambling to set up EV battery plants or electric auto plants in North America by associating as partners with Asian battery makers. Panasonic Holdings Corp, which is into supplying electric car batteries to Tesla Inc, has entered into talks for investing $4 billion in a battery plant based in the US, as the Wall Street Journal reported last week. Korean battery manufacturers have a series of plans for setting up battery plants in the United States, thereby building four for General Motors Co., three for Ford Motor Co., and two for Stellantis NV.
Bloomberg News also reports that Honda, in the meantime, is planning to spend as much as 5 trillion yen, equivalent to $36 billion, on its EVs over the next ten years by introducing some near about 30 models, which is being seen as one of the most aggressive of electrification expansion in Japan. This new plant will produce pouch-type cells for Honda and EVs of Acura.
The car makers outside the United States have been facing a new local law related to energy and tax policy which is known as the Inflation Reduction Act, which needs them to assemble electric vehicles in the United States, thereby reducing dependence on China when it comes to using minerals usage in batteries for securing a maximum subsidy of $7500-a-car. With Nissan’s Leaf being an exception, no other Japanese EV model would be eligible for the subsidies as per the new norms.
The trade minister of South Korea, Lee Chang-yang, stated on Monday that he would seek cooperation with European nations and Japan to ease the requirements on battery makers and EVs.
