TOKYO, Aug 30 ― Japan's Honda Motor Co will build a new US$4.4 billion (RM19.7 billion) lithium-ion battery plant for electric vehicles in the United States with Korean battery supplier LG Energy Solution Ltd, the two companies said yesterday.

Battery makers are looking to increase production in the US where a shift toward electric vehicles (EV) could increase as the country implements stricter regulation and tightens tax credit eligibility.

The location of the plant has not been finalised, the companies said, but two people briefed on the matter confirmed reports Honda is seriously considering Ohio, where Honda's main US factory is located.

The companies aim for annual production capacity of approximately 40 GWh with the batteries supplied exclusively to Honda facilities in North America to power Honda and Acura EV models.

The pair are expected to establish a joint venture before building the plant, with the start of construction planned for early 2023 and mass-production by the end of 2025.

Ohio Governor Mike DeWine said his administration is working with Honda and LG "to ensure that they choose Ohio for this new electric battery plant.” The sources briefed on the matter said an announcement on the location could come in weeks.

The US government has been pushing policies designed to bring more battery and EV manufacturing into the country.

President Joe Biden signed a US$430 billion climate, health care and tax bill this month that would render electric vehicles assembled outside North America ineligible for tax credits.

White House Deputy National Climate Adviser Ali Zaidi praised the Honda LG "massive investment” that he said was catalysed by climate and infrastructure legislation.

US Energy Secretary Jennifer Granholm said the administration was bringing "back the domestic manufacturing of batteries to provide Americans with good-paying jobs that will power the EV revolution.”

California announced a plan last week requiring all new vehicles sold in the state by 2035 to be either electric or plug-in electric hybrids.

The two companies said a combination of strong local electric vehicle production and the timely supply of batteries would put them "in the best position to target the rapidly-growing North American EV market.”

LG Energy Solution, which is mainly engaged in the development of lithium-ion battery materials and next-generation batteries, also supplies EV batteries and has signed joint-venture agreements with General Motors, Hyundai Motor Co and Stellantis.

In July, Panasonic Energy Co, a unit of tech conglomerate Panasonic Holdings Corp and a major Tesla Inc supplier, said it had selected Kansas as the site for a new battery plant with investment of up to US$4 billion.

Earlier this year, Honda laid out a target to roll out 30 EV models globally and produce about 2 million EVs a year by 2030. ― Reuters