Honda, LG join for $4.4B EV battery plant in US in move away from China

The electric vehicle battery market is getting a boost in the U.S. with increasing pressure to get manufacturing out of China. On Monday, Japanese carmaker Honda and South Korea’s LG Energy announced a $4.4 billion deal to build a battery plant stateside, with mass production expected to start in 2025.

The lithium-ion batteries will be used for Honda and Acura EV models in North America. While Honda and LG report that a location for the plant has not been finalized, multiple reports have Ohio as the frontrunner, where Honda already has three car plants.

This is just the latest automaker-battery supplier marriage this year as the two industries look to split the cost of new factories. LG Energy is also teaming up with General Motors in Michigan on a $2.6 billion deal, while Stellantis and Samsung are an item in Indiana with a $2.5 billion plan.

The Honda-LG union, meanwhile, comes on the heels of President Joe Biden’s push to bring more battery manufacturing to the U.S. Under the newly-passed Inflation Reduction Act, at least half of the EV battery will need to be made in the U.S. to qualify for a lucrative $7,500 electric vehicle tax credit, which is a threshold very few models can meet today. China has a dominant hold on EV battery production.

The development also comes as car manufacturers around the world expand further into the EV space. Honda has been considerably slower in its electric developments than some of its competition but is investing billions into electric vehicles now and has plans to be carbon neutral by 2050.