[Click eStock] LG Energy Solution-Japan Honda Battery Joint Venture.. "The Only Alternative to Korean Batteries"

[Asia Economy Reporter Junho Hwang] Regarding LG Energy Solution's establishment of a joint battery plant with the Japanese automaker Honda, Daishin Securities analyzed that Korean battery companies are becoming the only alternative for building the electric vehicle supply chain in the North American region. Accordingly, it is expected that cathode material vendors such as LG Chem and POSCO Chemical, which can enter the North American market, will continue to benefit.

Jeon Changhyun, a researcher at Daishin Securities, stated, "The establishment of the LG Energy Solution-Honda joint battery plant in the U.S. will be reflected in performance after 2025, so there will be no short-term upward revision of earnings estimates," adding, "It is estimated to be partially included within the existing shared capacity guidance." LG Energy Solution's capacity guidance is 540 GWh in 2025 (EV 520 GWh, Non-EV 20 GWh), with North American capacity estimated at 230 GWh.

On the 29th, LG Energy Solution announced the establishment of a joint battery plant with the Japanese automaker Honda in the U.S., with a battery capacity of 40 GWh. The total investment scale is 5.1 trillion KRW, and LG Energy Solution will invest 2.4 trillion KRW in cash (acquiring a 51% stake) by 2027 after establishment. The plant is expected to produce enough volume to supply 660,000 BEVs equipped with 60 kWh capacity batteries, with construction scheduled to begin in the second half of next year. Pouch battery cells and modules are expected to be mass-produced in 2025.

Honda stated that the plant was established to supply batteries for EVs of Honda and Acura (Honda's premium brand), and LG Energy Solution is expected to diversify its portfolio and expand its dominance in the North American market through this joint venture.

Researcher Jeon commented, "It is impressive that vendors for Japanese OEMs, which have been building a closed SCM centered on domestic companies, are entering the market." He noted that, compared to Chinese companies facing difficulties entering the local market due to intensified U.S.-China conflicts and Japanese companies making passive local investments, Korean battery companies are emerging as the only practical partners for building the North American EV value chain.

In particular, following the recent enactment of the IRA (Inflation Reduction Act), all imported EVs in North America have been excluded from subsidy benefits. This is presumed to be a judgment recognizing the urgency of establishing a local EV value chain.

The joint venture is also expected to benefit local material suppliers. The 40 GWh battery capacity requires about 68,000 tons of cathode materials annually based on high-nickel standards. Local material companies capable of entering the North American market include LG Chem and POSCO Chemical.

Researcher Jeon said, "Currently, most of Honda's EV models sold in the North American market are HEV models such as the Accord Hybrid and CR-V Hybrid, with battery vendors being BEC/Panasonic and cathode material vendors being Tanaka/Nichia, all Japanese companies," adding, "The new capacity will be for BEV/PHEV models, and it is expected that cathode materials will likely be sourced from LG Energy Solution's value chain rather than existing Japanese vendors."

This content was produced with the assistance of AI translation services.