LG Energy Solution Ltd. and Honda Motor Co. have launched their first US joint venture to build an electric vehicle battery plant in Ohio, LG said on Friday.
The US venture will break ground next month on the battery factory near Jeffersonville in the US state, into which both companies will inject a combined $4.4 billion.
Once completed by the end of next year, the factory will begin mass production of pouch-type batteries from the end of 2025, LG said in a statement.
They will be supplied exclusively to Honda's manufacturing facilities in North America. The batteries to be produced there will generate electricity of up to 40 gigawatts per hour (GWh), enough to power 500,000 high-performance EVs.
The JV marked the first strategic partnership formed between a South Korean battery manufacturer and a Japanese carmaker, meaning the tables have turned for LG.
"A decade ago, LG reached out to Honda to sell its batteries, but was rejected with no opportunity given to pitch its products," said an industry official.
"But Honda approached LG last year, asking for batteries," he said.
The two companies signed a preliminary agreement in August of last year to build a JV battery plant in the US to meet growing demand for EVs.
The aim of the JV is also to cope with the US Inflation Reduction Act that favors EVs sourcing key battery materials produced domestically or through foreign trading partners.
LG Energy will hold a 51% stake in the JV, temporarily called L-H Battery Company Inc., by 2027. Honda will have the remaining 49% stake.
Robert H. Lee, LG Energy Solution’s North America head and chief strategy officer, will lead the JV as chief executive. Rick Riggle, head of Honda’s Anna Engine Plant in Ohia, was named chief operating officer of the venture.
The US venture is expected to create 2,200 jobs.
RECORD EARNINGS
Last year, LG Energy posted its largest-ever profit, driven by strong sales after its US joint venture with General Motors Co. started mass production late last year.
The world's No. 2 EV battery maker is also building battery plants jointly with Hyundai Motor Group and Stellantis N.V.
Toyota Motor Corp. is understood to sign a battery supply contract with LG Energy sooner rather than later, according to industry sources.
Separately, LG Energy is in talks with Ford Motor Co. to build a battery factory in Turkey.
The US automaker has chosen LG as its battery JV partner, after scrapping an agreement with SK On Ltd. to establish a $3 billion EV battery plant in the country.
Behind the deal's collapse were financing difficulties on the back of rising interest rates and an economic slowdown.
The EV market in the US has been growing at a rapid pace. It is forecast to expand by an annual average of 63% to 143 GWh by 2023 and 453 GWh by 2025, compared to 64 GWh in 2021, according to SNE Research.
Write to Hyung-Kyu Kim at khk@hankyung.com
Yeonhee Kim edited this article.
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