LG Energy Solution (LGES) and Honda plan to invest $4.4 billion and establish a new joint venture manufacturing plant in the U.S. that is expected to have an annual production capacity of approximately 40 GWh.
The pouch-type batteries produced at the new plant will be supplied exclusively to Honda facilities in North America. While the location for the joint venture plant has yet to be finalized, the two companies aim to begin construction in early 2023, in order to enable the start of mass production of advanced lithium-ion battery cells by the end of 2025.
After a second quarter earnings call revealed that LG’s profits were down over 24% from the previous quarter, LG noted that it could see a bright future, driven by scaling up manufacturing of EV batteries. The company said at the time that it planned to triple revenue in five years and achieve a double-digit operating profit margin, setting an annual revenue target to $16.74 billion. One of the ways in which the company said it planned to scale manufacturing was through expansion of its joint venture partnerships with major partners developing both cylindrical and pouch-type batteries, supplying existing customers as well as EV startups. Earlier this year, LG Energy Solution announced a commitment to construct a $2.1 billion battery manufacturing plant in Lansing, Michigan with General Motors to mass produce 50 GWh of pouch-type EV batteries.
LGES and Honda hold the shared belief that expansion of local electric vehicle production that can shore up the battery supply chain would position them to target the rapidly-growing North American EV market.
“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,” said Youngsoo Kwon, CEO of LG Energy Solution. “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.”
“Honda is working toward our target to realize carbon neutrality for all products and corporate activities the company is involved in by 2050,” said Toshihiro Mibe, president, CEO and representative director of Honda Motor Co., Ltd. “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.”
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