US 'Battery China Isolation Strategy' Amid First Korean-Japanese Battery-Automaker Joint Venture

LG Energy Solution-Honda Joint Venture
Investing a Total of 5 Trillion KRW to Establish
Battery Manufacturing Plant in the US

At the signing ceremony for the establishment of the battery joint venture between LG Energy Solution and Honda, Kwon Young-soo, Vice Chairman and CEO of LG Energy Solution (left), and Toshihiro Mibe, CEO of Honda, are posing for a commemorative photo. Photo by LG Energy Solution

LG Energy Solution and Honda have officially established a joint venture, marking the first collaboration between Korean and Japanese battery and automaker companies. As the United States pushes for a battery supply chain restructuring excluding China through the Inflation Reduction Act (IRA), leading mobility companies from Korea and Japan have joined forces.

On the 30th, LG Energy Solution announced that it held a signing ceremony for the battery joint venture with Honda at its headquarters in Yeouido, Seoul, and will invest a total of $4.4 billion (approximately 5.1 trillion KRW) to establish a 40GWh battery production capacity in the United States.

The factory site is under review, with construction planned to begin in the first half of next year and mass production of pouch battery cells and modules scheduled to start by the end of 2025. The produced batteries will be supplied to Honda and Honda’s premium brand, Acura, electric vehicle models. Honda ranked among the top 7 global automakers by sales volume last year. It operates 12 manufacturing plants in the U.S. and has maintained a 5th to 6th market share in the North American market over the past decade.

This joint venture establishment is the first strategic cooperation case between a Korean battery company and a Japanese automaker. Japanese companies generally prefer to collaborate with domestic firms they have established partnerships with, but LG Energy Solution has partnered with Honda, surpassing Panasonic, Japan’s largest battery company. Especially as the U.S. is openly pursuing a strategy to exclude Chinese battery companies from the North American market, the active cooperation between Korean and Japanese companies is expected to influence the diversification of supply chains in the battery industry. Prior to Honda, LG Energy Solution had already signed battery supply contracts with another automaker, Nissan, and commercial vehicle specialist Isuzu.

Kwon Young-soo, Vice Chairman of LG Energy Solution, emphasized, "This joint venture with Honda, which has built a high brand trust, will be an opportunity to further strengthen our dominance in the North American electric vehicle market," adding, "Through close cooperation with customers, we will lead electrification and become the world’s best battery company trusted and loved by customers."

LG Energy Solution is strengthening its North American market strategy by expanding strategic cooperation with global automakers following its existing partnerships with U.S. companies General Motors (GM) and Stellantis amid the rapidly growing electric vehicle market. It currently owns an independent plant in Michigan with an annual capacity of 5GWh, and its joint venture Plant 1 with GM (35GWh) is operating in Ohio. Plant 2 (35GWh) is currently under construction in Tennessee. Earlier this year, LG Energy Solution and U.S. automaker Stellantis agreed to invest a total of 4.8 trillion KRW to build a joint electric vehicle battery plant in Canada.

The U.S. electric vehicle market is considered the fastest-growing market worldwide. According to market research firm SNE Research, the U.S. electric vehicle battery market is expected to grow sharply from 64GWh in 2021 to 143GWh in 2023 and 453GWh in 2025, with an average annual growth rate of 63%.

With this investment decision, LG Energy Solution’s global production capacity is projected to increase from 540GWh to 580GWh by the end of 2025. The North American share is estimated to expand from the existing 45% to 49%. This indicates a shift in the production base’s focus from Europe and Asia to North America.

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