Honda has buddied up with LG to build electric vehicle batteries in the American state of Ohio as it prepares to start making EVs in the US from 2026.
The joint venture is yet to win regulatory approval and commits both companies to a $US3.5 billion investment in a new battery plant in Fayette County, southwest of Columbus.
Construction is pencilled in for early 2023 with completion at the end of 2024 and first batteries a year later. It aims for an annual production capacity of 40 GWh, making pouch-type lithium ion batteries.
The LG Energy Solution battery will power Honda’s new US-made EV models.
IRA strikes again
The Japanese car company started manufacturing in the US four decades ago, a fact which means it has not been blindsided like its South Korean rivals by the Inflation Reduction Act (IRA), but does not make any EVs in the country nor does it have any available for sale there.
Hyundai and Kia are the second-biggest EV sellers in the US but the recently passed law’s new $7,500 tax credits on electric vehicles are only for EVs assembled in-country.
While both are investing in local EV production – Hyundai announced a $US10 billion investment in May into new EV and battery manufacturing in the US before the IRA was passed – both carmakers assemble their vehicles overseas.
Sales of EVs in the US are forecast to go from 8 per cent of total vehicle sales this year to 52 per cent or more in just eight years because of the IRA, according to data from BNEF.
The lure of the US EV market
From Honda’s perspective, its latest venture reveals a new awareness of the importance of both the North American EV market, where it wants all vehicle sales to be electric by 2040, and EVs.
It stopped making the Clarity Electric in 2019 and has been late to the EV game after focusing heavily on hydrogen fuel cell vehicles.
It is releasing it first electric SUV in 2024 in the US, trailing a number of other carmakers from Mercedes-Benz to Hyundai which either have vehicles in the market now, or are releasing new models next year.
Rachel Williamson is a science and business journalist, who focuses on climate change-related health and environmental issues.