Dive Brief:
- Honda and battery maker LG Energy Solution picked Fayette County, Ohio as the site of their planned battery plant to support Honda and Acura electric vehicle production, the automaker announced Tuesday.
- The companies will initially commit to investing $3.5 billion in the facility but project total investment to reach $4.4 billion, according to the release. Construction is slated to begin early 2023, in an effort to mass produce lithium-ion batteries by the end of 2025.
- The investment is part of a joint venture with LG Energy Solution, which is pending regulatory approval. Honda partnered with the battery maker after announcing in April it was looking to establish a battery plant near a planned EV production line in North America.
Dive Insight:
More automakers are bringing EV battery production in-house to secure a stable supply of batteries as demand for vehicles outpaces the manufacturing of them.
LG Energy Solution last year created a joint venture with Stellantis to construct a large-scale battery plant in Ontario, Canada — the country's largest automotive cluster. The companies said they expect the plant will spur a "strong battery supply chain in the region."
Now, Honda is following a similar script in Ohio. In addition to the joint venture with LG Energy Solution, the automaker announced it will invest $700 million to retool three Ohio plants.
“These Honda facilities, along with the new EV battery plant, will serve as a new EV hub in Ohio,” the company said. “Honda’s EV hub will leverage the company’s longstanding production, product development and purchasing operations located in Central Ohio.”
The actions come as the automaker aims to begin EV production and sales in North America by 2026, and make battery-electric and fuel cell EVs represent 100% of its vehicle sales in North America by 2040.
EV batteries manufactured at the joint venture plant will be combined with battery cases produced at Honda’s Anna Engine Plant and installed in EVs built at two other Ohio plants, after they are revamped for EV production, Honda said in the news release about the three retooled plants.
Honda is not alone in building out EV production capabilities in a shared space or near existing sites to speed production timelines.
Ford has begun construction on an EV “mega campus,” bringing suppliers, a battery plant and assembly line to one location to exert greater control over its supply chain. General Motors has taken a similar approach, with two of its joint venture battery plants located in Ohio and Michigan near neighboring facilities.
Automakers' U.S. investments come on the heels of federal incentives encouraging domestic production of electric vehicles.
The Inflation Reduction Act of 2022 includes up to $7,500 in tax credits for people who buy EVs, which are contingent in part on a vehicle's final assembly in North America. In a statement on Tuesday, President Joe Biden credited the act for driving the "manufacturing boom,” and praised Honda and LG for committing funds into Ohio production.
"It’s another win for America and another win for Ohio, with Honda and LG committing more than $5 billion toward electric vehicle battery manufacturing and factory retooling across the state," Biden said.
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