Joint Venture LG Energy Solution (LGES) and Honda Motor Co., Ltd. announced an agreement to establish a joint venture (JV) company. It will produce lithium-ion batteries in the US to […]
LG Energy Solution (LGES) and Honda Motor Co., Ltd. announced an agreement to establish a joint venture (JV) company. It will produce lithium-ion batteries in the US to power Honda and Acura EV models for the North American market. With this agreement, LGES and Honda will invest a total of USD $4.4 billion. Also, they will establish a new JV plant in the US. The plant aims to have an annual production capacity of approximately 40GWh.
The pouch-type batteries produced at the new JV plant will be supplied exclusively to Honda facilities in North America. They do not decide the location for the joint venture plant, but Honda is planning to produce EV in North America. So, the two companies aim to begin construction in early 2023. Also, they want to start mass production of advanced lithium-ion battery cells by the end of 2025.
LGES and Honda shared belief that expanding local electric vehicle production and ensuring the timely supply of batteries are important. As a result, they would put two companies in the best position to target the rapidly-growing North American EV market.
Youngsoo Kwon, CEO of LG Energy Solution mentioned in the following.
“Our joint venture with Honda, which has significant brand reputation, is yet another milestone in our mid- to long-term strategy of promoting electrification in the fast-growing North American market. Since our ultimate goal is to earn our valued customers’ trust and respect, we aspire to position ourselves as a leading battery innovator, working with Honda in achieving its core initiatives for electrification, as well as providing sustainable energy solutions to discerning end consumers.”
Toshihiro Mibe, President, CEO and Representative Director of Honda Motor Co., Ltd., also stated as follows.
“Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050. 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. 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.
North America becomes an important Electric Vehicle more than before. Of course, China is the biggest EV market in the world. However, the next biggest market, Europe, is facing the challenge. It is the decrease of gas supply from Russia, and it causes rapid increase of gas and electricity price. As a result, some people want to use gasoline engine cars.
Of course, this fact does not mean that Europe has changed its direction. However, it might take more time for customer to purchase EVs in Europe. On the other hand, the US is accelerating electrification in the country, so this is a reason why Honda made this investment. Therefore, China, Europe and North America are most important EV markets now.