Honda Motor will build a battery plant for electric vehicles in the U.S. with South Korean battery maker LG Energy Solution as EV makers and their suppliers seek a presence in the American market. 

Honda and LG Energy will invest $4.4 billion in the effort. This will be Honda’s first EV battery plant and as the demand for electric vehicles increases, Honda wants to secure a local battery plant. 

Honda and LG Energy will establish a joint venture to produce lithium-ion batteries. Honda will take a 49% stake in the operation, with LG Energy holding the remaining 51%. The state of Ohio, where Honda has major operations, is seen as the most promising location. 

The plan is to have an annual production capacity of up to 40 gigawatt-hours, enough to equip 700,000-800,000 typical EVs. All output will be shipped to Honda’s North American plants. 

LG Energy holds the second-largest share of the global battery market, after China’s Contemporary Amperex Technology (CATL). In addition to General Motors, the company has established a joint venture to make batteries in North America with Europe’s Stellantis to increase its production capacity. 

LG Energy has an annual production capacity of 30 gigawatt-hours at its plants with GM and other companies, and it appears that the plant with Honda will be on the same scale. That is enough to supply 500,000 to 600,000 standard electric vehicles. 

Honda’s goal is to make all of its new cars either electric vehicles or fuel cell vehicles (FCVs) by 2040. In the U.S., two electric models equipped with Ultium batteries, jointly developed by GM and LG Energy, will launch in 2024. 

In 2026, Honda plans to launch an EV with a platform that Honda will develop independently. It is expected to be equipped with batteries produced by the automaker’s joint venture with LG Energy.  

Honda plans to produce about 800,000 electric vehicles in the U.S. by 2030. The company is also considering building a new production line exclusively for electric vehicles. 

The U.S is the second-largest auto market after China. The new bill that has enabled tax credits for electric vehicles is expected to further boost EV pickup. Major automakers’ basic strategy is to procure batteries near where they produce vehicles to keep costs down and therefor