Honda and LG Chem will build 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 shore up the country’s domestic production to comply with new tax credit rules.

Honda and LG Chem will form a joint venture to produce batteries in the US for the automaker’s upcoming lineup of EVs. The two companies aim to begin construction in early 2023 to enable the start of mass production of lithium-ion battery cells by the end of 2025. Honda and its subsidiary Acura have plans to release 30 hybrid, battery-electric, and fuel-cell vehicles by 2030.

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

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

The factory is part of a host of new EV facilities that are expected to come online in the coming years. Globally, battery production is expected to grow from 95.3 gigawatt hours (GWh) in 2020 to 410.5 GWh in 2024, according to GlobalData, a data and analytics company.

Ford has said its three new battery plants will enable 129 GWh a year of production capacity. 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 is aiming to have six battery cell production plants operating in Europe by 2030 for a total of 240 GWh a year. And Stellantis is planning a new factory in Indiana, which will have 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 Ultium battery packs. GM and Honda have said they expect to produce “millions” of affordable EVs starting in 2027.