Honda and LG Chem to set up a $4.4 billion EV battery factory in the US

Honda and LG Chem will build a $4.4 billion electric vehicle battery factory in the US, the latest move to ramp up the country's domestic production to comply with new tax credit rules.

Honda and LG Chem will form a joint venture to manufacture batteries in the US for the automaker's upcoming lineup of EVs. Both companies aim to begin manufacturing in early 2023 to enable the start of mass production of lithium-ion battery cells by the end of 2023. Honda and its subsidiary Acura plan to release 30 hybrid, battery-electric and fuel-cell vehicles. by 2030.

According to The Wall Street Journal, the factory, which aims to have an annual production capacity of about 40GWh, is likely to be located in Ohio. The state is also the site of a $2.3 billion future battery plant being built by LG Chem and General Motors.

Localizing battery production in the US is important for automakers who want to qualify for the $7,500-per-vehicle tax credit, which requires EVs to be assembled in the US. Foreign automakers have expressed concern that the new tax credits could discriminate against companies without manufacturing facilities in the US.

The Factory is part of a number of new EV features that are expected to come online in the coming years. According to data and analytics company GlobalData, battery production globally is expected to increase from 95.3 gigawatt hours (GWh) in 2020 to 410.5 GWh in 2024.

Ford has said that its three new battery plants will enable production capacity of 129 GWh per year. General Motors is planning four new battery factories in the US (also with LG Chem) for a total annual capacity of 140 GWh, while Volkswagen aims to operate six battery cell production plants in Europe, a year by 2030. 240 GW per year. , and Stellantis is planning a new factory in Indiana with an initial annual production capacity of 23 GWh.

Honda has teased two upcoming EVs: the 2024 Honda Prologue and an Acura concept called the Precision. The Prologue will be the first of two vehicles that Honda is co-developing with GM, using the US automaker's Altium battery pack. GM and Honda have said they expect to produce "millions" of affordable EVs starting in 2027.