TOKYO – Honda Motor Co. and South Korean battery maker LG Energy Solution said they will invest $4.4 billion to build lithium ion batteries in the U.S. for Honda and Acura brand electric vehicles.
The move, announced on Monday in a statement, will establish a joint venture battery plant with annual capacity for about 40 gigawatt hours of pouch-type lithium ion batteries.
The power packs will be supplied exclusively to Honda in North America, though LG Energy Solution and Honda said the location of the plant has not yet been finalized.
Construction is slated to start in early 2023 with mass production beginning by the end of 2025.
The ramp up comes as Honda plans to build about 800,000 electric vehicles in North America by 2030. By that time, EV production should account for 40 to 50 percent of the company's total output in North America, underscoring Honda’s need for a big increase in battery supply.
North American production of batteries is especially critical to comply with the requirements set forth for EV incentives in the recently enacted Inflation Reduction Act. EVs qualifying for up to $7,500 in tax credits must source their battery materials from countries the U.S. has a free trade agreement with, and a certain percentage of the battery must be made in North America.