Honda Motor Co., which does not sell battery-powered cars in the US, is accelerating plans for that high-growth market segment with a $4.4 billion US plant that it will operate with LG Energy Solution. The plant’s location would allow its future electric vehicles to qualify for a revised federal tax credit.
The automaker said in Tokyo on Monday that it is entering into a joint venture with LG for a facility that will produce 40 gigawatt hours of lithium-ion batteries annually when it opens in 2025, with construction set to begin next year. The Wall Street Journal reported that the new plant will be in Ohio, home to Honda’s key North American manufacturing and engineering operations, citing those familiar with the matter. Honda spokesman Marcos Frommer declined to confirm.
The news comes on the heels of this month’s passage of the Inflation Reduction Act, which includes a new $7,500 federal tax credit for consumers to buy EVs. But unlike an earlier version of the credit, qualifying vehicles must be built in North America and 50% of key battery components, such as cathodes and anodes, must also be made in North America. To receive full credit, at least 40% of critical battery materials must be mined or refined in the US or countries with which it has free trade agreements, or the materials must be recycled in North American facilities.
Honda’s talks with LG predate the US tax credit rule, Frommer said. A project of this type would take months to prepare, said Sam Abuelsamid, an automotive technology analyst for Guidehouse and a former Ford engineer who is a senior associate at TBEN.
“It doesn’t happen overnight,” Abuelsamid. “If you look at the general trend in the industry, the entire industry has been moving towards locating battery production in recent years.”
The US sees the creation of an entirely new production base to support electric vehicles. Over the past year, General Motors, with which Honda also has a battery partnership, Ford, Volkswagen, Hyundai, Toyota, Panasonic, Redwood Materials and Sila announced tens of billions of dollars worth of plans to build battery plants and facilities for battery components, few of which are currently in operation. the region exist. Until now, Elon Musk’s Tesla was the only major automaker with its own dedicated battery manufacturing operations in the US.
Tesla’s competitors rely on South Korea and China for batteries and materials, although the US’s trade tensions with China and concerns over global supply chains make that increasingly challenging.
“As the number of EV nameplates planned to be produced has increased dramatically, it now makes more sense to locate that production,” Abuelsamid said. “Batteries are big, they are heavy, they are bulky, [it costs] a lot of money to transport them and it is a challenge to transport them from a safety point of view.”
Honda has said its first dedicated EV, the Prologue SUV, will arrive in 2024. The company is also preparing the ZDX, an electric SUV for its premium Acura line for 2024.