Honda and LG investing $4.4B to build batteries in the US

Although many Japanese automakers are falling behind in the EV race, Honda is taking a big step today to solidify its place in the future of automobiles. Honda announced Monday that it will be forming a new joint venture with LG Energy Solution to build EV batteries in the US.

Japanese automakers have been slow thus far to join the growing movement toward electric vehicles, with two of the biggest automakers, Honda and Toyota, both having shown skepticism toward the industry. A Toyota executive was recently quoted saying something along the lines of demand for EVs is not strong enough. For context, neither company has a pure battery electric vehicle to test that theory.

However, with the Inflation Reduction Act passing in the US and new incentives for buying US-made EVs, they may be forced to change their stance.

Honda expanded its partnership with GM in April with plans to introduce an affordable EV lineup. The Japanese automaker initially partnered with GM in 2020 with plans to build two EV models on GM’s Ultium battery platform.

We recently saw a glimpse of the upcoming Honda Prologue, its new EV SUV, which will be built on the platform.

The Japanese automaker aims for 100% electrified vehicle sales by 2040, a much slower pace than its peers. But “electrified” is broad and can also include hydrogen-powered cars or hybrids.

Although the progress has been slow so far, Honda seems to be picking up the pace with a sense of urgency. With today’s announcement, the legacy automaker is getting one step closer to its EV goal.

Will Honda’s new joint venture with LG to build batteries accelerate its EV strategy?

Honda joins a growing list of automakers establishing partnerships for EV batteries. For example, GM’s Ultium platform (which Honda is using to build its EVs) is also made with the help of LG Energy.

Under Honda’s new agreement with LG, the joint venture will make lithium-ion batteries for its Honda and Acura EV models. Honda and LG are investing $4.4 billion to establish a new US plant that expects a 40 GWh annual capacity.

Honda’s president and CEO, Toshihiro Mibe, spoke of the new partnership, saying:

Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050

He adds:

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 U.S. with LGES, the leading global battery manufacturer, will be part of such a Honda approach.

Based on Honda’s comments, it sounds like the automaker may be warming up to the idea consumers want EVs.

The location of the new plant is yet to be determined. But, with Honda planning to introduce EV models in the US, the partnership aims to start construction in early 2023, with mass production of EV batteries by the end of 2025.

Electrek’s Take

Honda’s new partnership with LG Energy is encouraging. I like to see the automaker putting together a plan to accelerate its EV strategy and make it happen.

Even though Honda has been slow to join the EV race, it’s better late than never. We will see if other Japanese automakers follow suit (looking at you, Toyota).

So far, the bill is doing exactly as designed, bringing manufacturing back to the US. With the Inflation Reduction Act incentivizing buying EVs built in the US, Honda joins a growing list of automakers looking to build on US soil. Mercedes Benz, Hyundai, and others have announced they will make EVs in the US.