Honda and LG Energy Solutions to Build a $4.4 Billion Joint Venture EV Battery Plant in the U.S.

author: Eric Walz   

Japan's Honda Motor Co and battery maker LG Energy Solutions (LGES) are investing $4.4 billion to build a joint venture electric vehicle battery factory in the U.S. The factory will produce lithium ion batteries for Honda and Acura vehicles for the North American market.

LG Energy Solutions is a unit of South Korea-based LG Chem.

The battery plant aims to have an annual production capacity of approximately 40GWh, which is enough batteries to power up to 500,000 vehicles. 

The location of the EV battery factory has not yet been finalized by the two companies. Once a site is selected, construction is expected to begin in early 2023, with the mass production of advanced lithium-ion battery cells beginning by the end of 2025.

"Our joint venture with Honda, which has a significant brand reputation, is yet another milestone in our mid- to long-term strategy of promoting electrification in the fast-growing North American market," said Youngsoo Kwon, CEO of LG Energy Solution. 

The plant will produce "pouch cell" batteries, which will be supplied exclusively to Honda's assembly plants in North America. Unlike the cylindrical cell batteries used by Tesla, pouch cell batteries are flat and resemble a large envelope. The cell can be staked together with little wasted space inside the battery pack. It allows Honda to fit more battery cells in an EVs battery pack, which can improve energy density and increase driving range.

Honda said its decision to establish the joint venture battery plant in the U.S. will help the automaker expand local electric vehicle production. It will also ensure that Honda has the supply of batteries it needs to target the rapidly-growing North American EV market that's currently dominated by EV leader Tesla.

"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," said Toshihiro Mibe, President, CEO and Representative Director of Honda Motor Co., Ltd. "This initiative in the U.S. with LGES, the leading global battery manufacturer, will be part of such a Honda approach." 

The joint venture is scheduled to be established in 2022. The closing is subject to customary closing conditions, including regulatory approvals.

LGES has also entered into a joint venture with General Motors (GM) named Utium Cells LLC to produce batteries in the U.S with an investment of up to $4.6 billion. In April 2021, GM announced a second $2.3 billion plus investment to build an EV battery cell manufacturing plant in Spring Hill, Tennessee. 

Construction on the approximately 2.8 million-square-foot facility is already underway and the plant is scheduled to open in late 2023.

Ford Motor Co is also following its rival GM in setting up a joint venture with a partner to produce electric vehicle batteries at scale. The announcement came just a day after Ford unveiled its F-150 Lightning electric pickup, the battery-powered version of the most popular truck in May of 2021.

Ford and South Korea-based SK Innovation announced the signing of a memorandum of understanding (MoU) to create a joint venture EV battery company called "BlueOvalSK" to produce approximately 60 GWh annually in battery cells and array modules. Battery production is scheduled to begin by mid-decade, with potential to expand as Ford introduces new electric models.

Ford said that approximately 140 GWh of battery production will be required in North America, with the balance dedicated to other key regions, including Europe and China.

This past April, automaker Stellantis and LG Energy Solution announced a partnership to invest approximately $4.1 billion to build a battery factory in Canada. The factory will become the first large-scale, domestic, EV battery manufacturing plant in Canada. 

The plant will be located in Windsor, Ontario and is slated to begin production of batteries in 2024. The battery plant in Canada will have an annual production capacity of approximately 45 GWh.

Honda plans to ramp up its electric vehicle production to catch up with its rivals Future electric models will be built on three new dedicated EV platforms, one of which will be shared by General Motors. 

In April, the two automakers said they will work together to enable the global production of millions of EVs starting in 2027. 

The partnership will leverage the two companies' strengths in technology, design and supply chains. Honda and GM will co-develop new affordable electric vehicles in all segments, including passenger cars and SUVs. 

Eric Walz

Originally hailing from New Jersey, Eric is a automotive & technology reporter covering the high-tech industry here in Silicon Valley. He has over 15 years of automotive experience and a bachelors degree in computer science. These skills, combined with technical writing and news reporting, allows him to fully understand and identify new and innovative technologies in the auto industry and beyond. He has worked at Uber on self-driving cars and as a technical writer, helping people to understand and work with technology.