Honda Motor Co. and South Korean battery manufacturer LG Energy Solution Ltd. plan to build a $4.4 billion battery manufacturing plant in America. This is due to the fact that the Japanese automaker wants to abandon cars running on conventional fuel by 2040 completely.
The capacity will be about 40 gigawatt-hours, and they want to start production at the end of 2025. This year, the two companies will form a joint venture in which Honda will own a 49% stake with $1.7 billion invested. Construction is scheduled to start in early 2023.
Car companies are trying to build battery or electric vehicle factories in North America by partnering with Asian battery makers. Panasonic Holdings Corp., which supplies batteries for Tesla Inc.’s electric vehicles, is in talks to provide $4 billion for a US battery plant. Korean manufacturers also want to build battery factories in the US: four for General Motors Co., two for Stellantis NV, and three for Ford Motor Co.
Honda wants to spend 5 trillion yen ($36 billion) on electric vehicles over the next 10 years and create 30 new models. The new plant will produce batteries for Honda and Acura electric vehicles.
“Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050,” Honda CEO Toshihiro Mibe, said in Monday’s statement. “Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries, which is a critical component of EVs. This initiative in the US with LG Energy, the leading global battery manufacturer, will be part of such a Honda approach.”
Other automakers outside the US are also facing new energy and tax policy laws called the Inflation Reduction Act. It obliges manufacturers to assemble electric vehicles in the U.S. and reduces reliance on China to secure a maximum subsidy of $7500 per vehicle. With the exception of the Nissan Leaf, no other Japanese EV model will qualify for subsidies under the new rules.
South Korean Commerce Minister Lee Chang-yang said he would seek cooperation with Japan and European countries to reduce demands on electric vehicle and battery manufacturers.
Subscribe for our newsletter
Get Forex brokers reviews, market insights, expert analytics and education material right into your inbox for free!