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LG Energy Solution and Honda plan U.S. battery production for electric vehicles

The partners plan to start construction in early 2023 and enter production by 2025.

LG Energy Solution and Honda Motor Co. said they plan to invest $4.4 billion to set up U.S. manufacturing to jointly produce lithium-ion batteries to power Honda and Acura EV models for the North American market.

The partners aim to have an annual production capacity at the plant of around 40 GWh.

The pouch-type batteries will be supplied exclusively to Honda facilities in North America. The location of the plant is not yet final. The companies said they aim to start construction in early 2023 with a goal of starting mass production by the end of 2025.

In April 2021, Honda announced plans for 40% of its North American sales to be battery-electric and fuel cell electric vehicles by 2030, increasing to 80% by 2035, and to 100% by 2040. Honda has been producing cars in the U.S. for 40 years and currently operates 18 manufacturing facilities in North America. 

The U.S. EV market could be strengthened by two recent developments. First, the Inflation Reduction Act provides tax credits to consumers who buy electric vehicles, particularly those that are largely manufactured in the U.S. Second, the California Ari Resources Board approved a plan banning the sale of new gas-powered cars in the state by 2035.

In a statement, Honda said the California move would require “thoughtful collaboration” in a number of areas, including infrastructure buildout, the development of robust supply chains, and policy and market incentives. It said that California’s action “makes it more important than ever” for policymakers to enact complimentary policies that accelerate EV adoption.

And the automaker said that while it shared the goals of the recently revised federal EV tax credit, “the reality is that very few to no electric vehicles” will be eligible for this incentive in the near term.

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