WASHINGTON (Reuters) – Honda Motor Co Ltd and LG Energy Solution announced Ohio on Tuesday as the site for a joint $4.4 billion battery plant.
The two companies announced their plan in August, but didn’t stop at a US location. On Tuesday, they said they would initially commit to invest $3.5 billion and create 2,200 jobs, but said the total investment is expected to reach $4.4 billion.
Honda is separately investing $700 million to retool three factories in Ohio and create 300 new jobs as it seeks to increase production of electric vehicles.
Honda will manufacture the battery cases at its engine plant in Anna, Ohio, which will be combined with battery modules from the JV and then installed in electric vehicles made at two other Ohio plants.
The plant is the latest in a series of battery plants announced as automakers look to shift production from gas engines to electric vehicles.
The U.S. Congress in August approved billions of dollars in tax breaks and grants for automakers to encourage increased production of electric vehicles and batteries in the U.S. He also approved new consumer tax credits to encourage battery and electric vehicle manufacturing in North America.
President Joe Biden praised the Honda-LG announcement, saying the companies are “committing more than $5 billion to produce electric vehicle batteries and retool plants across the state.” Biden wants 50% of all new cars assembled by 2030 to be electric or hybrid.
Honda plans to begin production and sales of electric vehicles in North America in 2026 based on the new Honda e:Architecture.
The two companies plan to begin construction in early 2023 and aim to complete the new facility, about 40 miles (64 km) southwest of Columbus, Ohio, by the end of 2024.
The plant plans to have about 40 GWh of annual capacity as it begins mass production of lithium-ion batteries by the end of 2025.
Electric vehicle batteries produced at the new JV plant will be supplied to Honda’s automotive plant to produce electric vehicles for sale in North America. Honda aims for electric vehicles and fuel cells to account for 100% of vehicle sales by 2040.
In April, Honda and General Motors Co said they would develop a series of low-cost electric cars based on a new joint platform, potentially producing millions of vehicles from 2027 in a bid to overtake Tesla Inc in sales.
The announcement furthered GM’s plans to begin building two electric SUVs for Honda starting in 2024, the Honda Prologue and Acura models.
Automakers also face increased demands from California, the state’s largest auto market, which requires automakers to stop selling gasoline-only vehicles by 2035 and to have electric vehicles make up at least 80% of their sales.
(Reporting by David Shepherdson in Washington Editing by Alexander Smith and Matthew Lewis)